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Brown defends CGT shake-up

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26th Nov 2007
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Amid the continuing furore over the government's controversial changes to capital gains tax (CGT), prime minister Gordon Brown has stressed that even under the reforms the UK's CGT regime would still be below that of many of its international competitors.

The statement, during Brown's opening address at the Confederation of British Industry's (CBI) annual conference on Monday, is likely to anger business groups who continue to push for an overturning of the plans which would raise entrepreneurs' tax bills on selling their company by as much as 80%.

While the prime minister was quick to claim that ministers are still "ready and willing" to discuss the issue with businesses, he pointed out that UK CGT, even when raised to 18% from next April, is globally competitive.

"Germany's rate is 22%, France is 33%, the USA 35%, Japan is 40%, Ireland's 40% and Spain is 43%," Brown said. "So even under [the chancellor's] proposals Britain still has about the lowest capital gains tax of any of the major industralised countries."

Under fire chancellor Alistair Darling is due to follow Brown in addressing the CBI conference on Tuesday afternoon.

As well as the CGT controversy, Darling is also facing huge criticism over the Bank of England's bailing out of struggling bank Northern Rock and HM Revenue & Customs' loss of two discs containing the personal information of seven milion families.

Rumours ahead of today's conference suggested that the Treasury chief would pull out of the event but Brown's reference to "tomorrow's discussions with the chancellor" in his speech indicate he will show up.

Brown's defence of the CGT reforms come as CBI research released to coincide with the conference showed two fifths of small company owners have altered arrangements for new business investment as a result of the abolition of taper relief, while 36% having dropped plans for putting extra cash into existing operations.

In a session which followed Brown's conference address, Liberal Democrat leadership contender Chris Huhne said Brown's record in dealing with micro-economic issues such as CGT was "appalling" while Nick Clegg, Huhne's opponent in the race to be party boss, said the "Brown/Darling partnership is putting economic stability at risk".

In addition, one delegate taking part in the question and answer session after the prime minister's speech called for the "immediate resignation" of Alistair Darling. His demand was met with a round of applause from a section of the audience.

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