Delayed tax review anger
BUSINESS leaders on Teesside have roundly condemned the Chancellor’s decision to postpone a final announcement on controversial capital gains tax reforms until the New Year.
On Friday, shadow foreign secretary and MP for Richmond (Yorks) William Hague weighed into the debate, accusing the government of muddled thinking.
Speaking before an Institute of Directors’ meeting in Stokesley, he said: “This is the one positive review of business taxation that Gordon Brown introduced and it’s almost inexplicable that they want to do away with it.”
He said the reform was partly in response to the growth of private equity firms, but the outcry from small and medium sized enterprises, which would be hardest hit, had been predictable. While the Treasury stands to benefit by around £900m from introducing an 18% flat rate tax, it would stifle innovation and deter investment, say businesses. The threat has already fuelled a return of management buy-outs as business owners rush to dispose of assets before an April 1 guillotine.
In response to growing unrest, Alistair Darling had promised that he would review the reforms before Christmas. That has now been delayed, further unsettling the markets. “They should have thought about all these things before they embarked on it,” said Mr Hague.
CBI assistant regional director, Liz Smith said North-east business would be “very disappointed” by government stalling.
“By delaying any decision on CGT the Chancellor has added to the uncertainty businesses face looking towards the New Year,” she said. “The region is working very hard to develop an enterprise culture but we need a tax regime that is supportive. The government’s move to remove taper relief undermines confidence in the UK as a place to grow business.
“This could set back attempts in the North-east to increases numbers of businesses started, as well as impacting on growth plans of existing businesses.”
