Brexit & EconomyPoliticsMPs rap Darling over CGT reform

MPs rap Darling over CGT reform

Treasury select committee criticises chancellor for making changes without consultation

The influential Commons Treasury Committee has rapped chancellor Alistair
Darling for failing to consult in advance on his controversial withdrawal of
Capital Gain Tax taper relief.

The Labour-dominated committee demanded he set out how he plans to mitigate
the effect on small businessmen planning to sell up and retire within the next
two years.

And in a report to Parliament today it made it clear the autumn pre-Budget
report as stated in the Code for Fiscal Stability ‘should be consultative in
nature’ – not one of two tax-changing budget statements each year.

Labour committee chairman John McFall, said: ‘Changes such as this will
generally benefit from consultation.’

He added: ‘Tax simplification is a desirable objective, but the reforms of
capital gains tax will have an immediate impact on many individuals and
businesses that have sought to plan ahead.’

The committee said Darling had previously made it clear he would not make
changes to CGT that could have unintended and undesirable consequences, but had
done so regardless in the belief that they were inevitable side-effects in his
drive towards ‘good simplification’.

It accepted the desirability of the objective but voiced ‘concern’ as to the
side-effects and called for a statement as to the extent to which Darling is
prepared to engage in consultations.

The committee also called for urgent consultations on the crackdown on
non-doms taking effect in April and warned that the implication of Treasury
figures is that 4,000 of them will be the sole source of £800m additional
revenue in 2009-10.

The news came as prime minister Gordon Brown hinted at further concessions on
the move in a speech to the CBI.

‘We will continue to listen and discuss with you the representations we have
received about CGT, ensuring that we maintain reforms for a fairer and
simplified system that rewards enterprise,’ said Brown.

He promised the CBI ‘a long-term approach to tax and deregulation including
for Britain’s four million small businesses.’

Brown said the government would continue to work with the CBI ‘to
continuously modernise and simplify our taxregime and improve out tax
competitiveness.’

Further reading:

Download
the full report here

CBI: CGT changes killing business
spirit

Employer groups join forces over CGT

Tax
Hack

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