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Last Updated: Monday, 15 October 2007, 00:07 GMT 01:07 UK
Business unites against tax plans
Chancellor Alistair Darling
Alistair Darling has come under fire from big business
The UK's four leading business lobby groups have urged Chancellor Alistair Darling to put on hold controversial proposals to reform capital gains tax.

The groups, which include the CBI, have written a joint letter saying the plans will set back economic growth.

Different rates of relief for different kinds of investment will be replaced with a single 18% flat-rate tax, in a move outlined in the pre-Budget report.

Mr Darling says the measure will ensure private equity firms pay fairer taxes.

'Reverse gear'

But the CBI, Institute of Directors, British Chambers of Commerce and Federation of Small Businesses said they were "deeply concerned" about the proposals and were seeking a meeting with Mr Darling to put forward their case.

They said the proposals, which they described as being "a bolt out of the blue", would hurt small businesses and employee share-ownership schemes, as well as discouraging risk-taking by venture capital firms vital to economic growth.

"The impact of the decision will be felt throughout the economy," their letter said.

"The net effect will be to set back the growth of the economy over coming years by discouraging longer-term investment and risk-taking.

"Combined with this week's decision on capital gains tax, our members feel the government's 10-year effort to create a pro-enterprise agenda has been put into reverse gear."

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