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Chamber Calls For Radical Tax Changes

A call for radical tax changes in the Budget on 9 March has been sent to the Chancellor, Gordon Brown, by The Chamber for Coventry and Warwickshire.

"A radical overhaul of the current tax regime is essential to support the growth of small firms,"

said Malcolm Gillespie, chief executive of the Chamber of Commerce, Training and Enterprise.

"We need to encourage investment in small, high growth companies-which are the very firms which will provide most jobs in the coming decade."

The Chamber is calling on the Chancellor to make "significant" cuts in Capital Gains Tax to kick-start greater investment in the small firms sector, and cut the tax on individuals to 20 per cent.

"The current CGT system encourages individuals to invest offshore rather than in the UK's smaller enterprises," Mr Gillespie said.

"A recent survey (by MORI) found that 58 per cent would pay CGT at a tax rate of 20 per cent, and the number of those caught by CGT who use off-shore trusts would halve - from 31 to only 16 per cent.

"This capital needs to be invested in UK Ltd.

"A similar cut in the US in the early 1980 was a great boost to greater investment activity. And nowhere in the world is creating new jobs as fast as the Americans."

The Chamber also wants to see the ten-year tapering relief for set in the last Budget reduced to five years.

"Entrepreneurs who are prepared to take the risk of investing in businesses for five years should have their gains free from CGT," Mr. Gillespie added.

"The ten-year, tapering relief is too long, too complex, and simply not equitable particularly where investors roll over their capital from one business to another."

The Chamber says that the delicate state of the economy, with manufacturing contracting and exporters badly hit, demands a broadly neutral Budget.

And it challenges the Chancellor to stick to his self-imposed 'Golden Rule' that public borrowing should not exceed public investment.

"Enabling the Bank of England to make further interest rate cuts is the most effective way of stopping the slowdown in the economy, and achieving the desired 'soft landing'," Mr. Gillespie said.

"All long term pledges on taxes and spending need to reconsidered-and put on the back burner."

The Chamber points out that previously announced tax changes are estimated to bring in an extra 7-billion in the tax year starting in April.

In addition, while the Chancellor has announced a cut in corporation tax from 33 to 31 per cent, saving firms 600-million, in fact companies will be almost 2-billion worse off because of other decisions.

The include the decision to make the tax payable quarterly, and the abolition of advance corporation tax and foreign income dividends exemption.

"Any further tax burden on business would be at the expense of business competitiveness, at a time when world competition increases daily," Mr. Gillespie said.

MORE INFORMATION:  Barry Lloyd-Jones   01203 654260

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CWN / Business / The Chamber / 18 Feb 1999

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