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Last Updated: Thursday, 27 December 2007, 14:10 GMT
Business 'shocked' by tax change
Lord Jones
Lord Jones said the government was listening to business
Many in the business community have been shocked by the speed of changes to capital gains tax (CGT), the trade promotion minister has said.

Lord Jones said the announcement of the removal of tax relief for sales of firms and shares had been "swift".

All legislation could have "unintended consequences" but the government was listening to businesses, he added.

Ministers want a lower CGT rate on profits made from the sale of firms and shares held for two years or more.

Many in business say this will stifle entrepreneurship by discouraging long-term investment.

'Consulted'

Chancellor Alistair Darling announced the CGT plans in October's pre-Budget report and is expected to give fuller details of the plans early next year.

Lord Jones, who was formerly director general of the Confederation of British Industry, said: "I think it's fair to say a lot of people were shocked by it because it was so swift and so fast."

He told BBC Radio 4's The World at One: "The trouble with legislation... is it has to apply to everybody - it's a universal application.

"And the trouble is it catches certain parts. The law of unintended consequences comes in, which was never intended.

"I hope that whatever is announced... I hope they listen to the things that needed to be consulted on. At least they are listening, which is a good thing."

'Tax hike'

The government's plans would create a flat CGT rate of 18%, removing the lower 10% rate paid on profits from the sales of businesses held for more than two years.

The government says the new regime will be simpler and fairer.

It would mean people who sell valuable personal assets, such as second homes, would pay 18% instead of up to 40% at the moment.

Conservative leader David Cameron said last month: "If the chancellor fails to abandon or radically alter his approach, we will fight this tax hike on Britain's entrepreneurs every step of the way, inside and outside Parliament."

But Mr Darling has said: "Maintaining Britain as a good place to do business means ensuring we have a tax regime that is competitive, fair and simple."

SEE ALSO
No gains tax change before 2008
13 Dec 07 |  Business
Cameron attacks tax increase plan
27 Nov 07 |  Business
Capital gains tax moves explained
27 Nov 07 |  Business
Should capital gains tax be reformed?
27 Nov 07 |  Have Your Say
MPs call for tax reform rethink
26 Nov 07 |  UK Politics

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