HC Deb 21 May 1998 vol 312 cc1098-9
11. Mr. Desmond Swayne (New Forest, West)

What representations he has received on the impact of his proposals for ending retirement relief from capital gains tax. [41683]

The Financial Secretary to the Treasury (Dawn Primarolo)

Treasury Ministers have received 40 such representations, most of which ask for retirement relief to be retained or to be phased out over a longer period. Many business people have warmly welcomed the introduction of the new business assets taper relief, which takes over from retirement relief.

Mr. Swayne

Will the Financial Secretary confirm that the measure is regressive and amounts to a significant redistribution of income from the modestly-off to the wealthy, and that its effects are harshest on small business people who live above the shop and are approaching retirement—precisely the sort of people for whom Labour used to care? What will she do for those people, particularly in respect of the retrospective aspects of the tax?

Dawn Primarolo

I do not accept what the hon. Gentleman said. What a surprise! Taper relief is fairer. It will encourage long-term investment and reward entrepreneur investment. That is the Government's intention.

Mr. David Heathcoat-Amory (Wells)

Will the Financial Secretary confirm what is in her Finance Bill— that the capital gains tax system announced in the Budget is more generous to those selling very large business assets after 10 years, and less generous to entrepreneurs who sell their small businesses because of the loss of retirement relief? It is a fat cat charter in line with the Labour party's new priorities. It is in the Bill now, but will she confirm our suspicion that a U-turn is in prospect? As the Finance Bill unravels in Standing Committee, the capital gains tax system is being shown to be unworkable, impractical and perverse. Will she confirm that this generosity to fat cats at the expense of small entrepreneurs is wrong and will be reversed?

Dawn Primarolo

What is perverse is that Conservative Members welcomed the announcement of capital gains tax reform in the Budget and now seek to reinterpret their words. The reform encourages long-term investment and rewards entrepreneurs, something which the right hon. Gentleman's Government failed to do in office and which this Government intend to deliver.