Capital gains tax blighting business

Solicitors in Northern Ireland are likely to see more entrepreneurs investing in commercial property and fewer people prepared to start up their own small businesses, if the government does not change its attitude towards capital gains tax.

Northern Ireland already has a higher rate of corporation tax than the Republic of Ireland, and now the government is proposing that the taper method of collecting capital gains tax should come to an end, which could mean smaller businesses in the province could be liable to higher rates of corporation taxation.

Around 99 per cent of businesses in Northern Ireland at the start of 2006 were of the small variety with fewer than 50 employees, according to The Department for Business, Enterprise and Regulatory Reform.

Yet a spokesman for independent financial advisers Norwest Consultants remained optimistic, saying: "I don't really think that if someone was going to start a business that it is going to deter them from doing that. Someone sitting at home who was intending to start a business isn't going to change his mind because of capital gains tax."

However, he added: "It's a very stupid thing for the government to do. What they seem to be saying is 'we don't really care if you build a business, we are not going to encourage you, we are going to encourage you to sit and become property speculators'."

In the meantime, Dennis Swanson, president of broadcasting company Fox Television, told the Ireland-US Council in a lunchtime address that Northern Ireland had great investment potential, but "missing from the party" was a corporation tax deal.

Mark Durkan, the SDLP leader, replied that the enterprise committee had urged the Varney Review to recommend a reduction in corporation tax, the results of which will be published later this month.

"We are in a situation now that if we are going to make a successful case for corporation tax, Team Northern Ireland has to pull together," Mr Durkan said.

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