Alistair Darling, the Chancellor of The Exchequer, dug his heels firmly into the ground yesterday; when he met with business leaders who were pressing him to change his plans to abolish tapering relief on capital gains, and replace it with a flat rate 18% charge.
Darling refused to be moved by their pleas.
The Director General of the CBI, Richard Lambert, put a brave face on it and said that the talks had been "positive". He claimed that the Treasury had to look at ways to encourage entrepreneurs.
The CBI, British Chambers of Commerce, Institute of Directors and Federation of Small Businesses believe that the change will negatively impact small businesses and entrepreneurs.
Mr Lambert said:
"We believe the pre-Budget proposals represent a significant step in the wrong direction for the UK economy, and we will continue to press the case for them to be changed.
As things stand, they will hold back vital investment in businesses of all sizes and send out totally the wrong message about the Government's attitude to enterprise."
That's probably very true. However, the announcements made by Darling wrt the tax changes were not done on the basis of sound economics but out of political expediency. Gordon Brown had run scared of an election, and the Tories fox (wrt inheritance tax) needed to be shot.
The remaining years of the Brown/Darling "partnership" will be unhappy ones for the British economy, political short-termism and fudge will replace any semblance of fiscal probity.
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