A LEADING business lobby group yesterday backed City A.M.’s campaign against damaging government proposals to raise capital gains tax (CGT) to levels in line with income tax.
The British Chambers of Commerce (BCC) said that business prosperity would suffer if the coalition does not introduce taper relief, indexation or entrepreneurial relief along with the changes, which are due to be finalised by chancellor George Osborne at the emergency Budget next week.
Adam Marshall, the BCC’s director of policy and external affairs, said that businesses are concerned first and foremost about the prospect of yet more upheaval in the tax system, just a few years after Gordon Brown changed CGT to a flat 18 per cent rate.
“Our biggest concern is that business growth would be affected if CGT increases to near income tax levels without very clear exemptions for enterprise and entrepreneurial activity,” Marshall said. “Such a system may result in individuals and businesses in the UK putting off investment.”
City A.M. supports a CGT proposal like the one put forward by Tory MP John Redwood, whereby short term gains are taxed in line with income to prevent them being disguised as such. Longer-term gains are then subject to a tapering rate of CGT down to zero per cent after five years.
The campaign has received the backing of the likes of the IoD, Tullett Prebon boss Terry Smith and entrepreneur Luke Johnson.