Partner Article

Chancellor's tax move 'undermines enterprise'

Chancellor Alistair Darling came under further fire from businesses in the North East at the end of last week. The Director-General of the Confederation of British Industries sent an open letter to Mr Darling expressing the group’s concerns over the changes to the Capital Gains Tax.

The letter says the move “undermines the 10 year effort by this government to promote enterprise and risk-taking within the UK. “By removing taper relief you have deployed an extremely blunt instrument that will deeply damage a much wider community [than private equity alone], and in so doing, risk the medium-term health of our economy.”

Andrew Mitchell, Chief Executive of NStar Finance, said: “The changes to CGT rules were designed to deal with an anomaly that favoured a few highly paid managers of ‘big ticket’ private equity firms, mainly based in London; however, as CBI Director General - Richard Lambert - has pointed out, an unintended consequence of these changes will be the adverse impact they will have on genuine risk-takers and entrepreneurs, many of whom have put their livelihoods on the line to invest in the success of their businesses here in the North East.

“We are concerned that the new 18% rate removes an important incentive for high growth companies on which our economic future depends. From a tax perspective, you would now be better off investing in a holiday home in the Algarve than investing in a high growth company here in the Region.”

Sarah Green, Regional Director of CBI North East, said: “The North East is working very hard to develop an enterprise culture but we do need a national tax regime that is supportive. The government’s rash move to remove taper relief undermines confidence in the UK as a place to grow business.”

Roger Brookes, Managing Director of Metal Spinners Group in Newburn, said: “This unilateral decision by the Chancellor undermines the significant effort put in by SME business owners who fight to ensure their businesses survive in an increasingly competitive environment. It totally undermines the government’s calls for a more enterprising culture and will impact the willingness of investors to continue to create new employment within this region.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .