Darling: Capital gains tax change needed

Alistair Darling today left open the possibility for a U-turn on “controversial” plans to reform capital gains tax.

Speaking to the Confederation of British Industry (CBI), the chancellor said he was “open to suggestions” on forthcoming tax reform.

But he gave little indication he would fully concede to business criticisms, as Conservative leader David Cameron position his party alongside business leaders.

Addressing the conference this morning, Mr Cameron said the government was “on the rocks” and the business industry would win its fight over capital gains tax.

The government wants to end taper relief – which taxes some windfalls at as little as ten per cent – and simplify the system with a uniform 18 per cent rate.

Mr Darling said today it was “right and fair” for capital gains tax to be applied on a flat rate, adding it was “important” the tax system was “competitive, fair and simple.”

Facing business leaders, the chancellor accepted the proposed reforms – announced in last month’s pre-Budget report – had been controversial.

Mr Darling said: “We are working with the CBI and other business organisations to listen to what you have to say. I expect to publish their proposals in the next three weeks.

“I am listening to what you say and will report to parliament very shortly.”

He defended the lack of formal consultation, insisting the government did not always have to consult on tax rates.

But he said this did not mean ministers would not listen to representations from the CBI.

He explained: “If you come to me and say ‘if you make these changes it could really help me and my business,’ then of course I’m open to suggestions as it is totally in our interests to do so.”

Mr Cameron claimed the uniform 18 per cent rate would burden entrepreneurs and opposed the reforms in his speech to the CBI.

CBI director general Richard Lambert has warned of a “cry of rage” if the final proposals on capital gains tax do not satisfy business leaders.