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Alistair Darling was lambasted by business on Wednesday for being in a state of “complete confusion” on his proposed reforms to capital gains tax, as he continues to agonise over how to water down his original proposal.

The chancellor promised to announce his final plan before Christmas, then said there would be a statement in the new year. After another week of silence, the patience of some business leaders is exhausted.

Richard Lambert, the head of the CBI employers’ body, said the delays were causing “enormous damage” to the reputation of the government and the issue was a “touchstone” in its relations with business.

“We are in a state of complete confusion,” Mr Lambert told the BBC.

He said: “Nobody has a clue what’s going on and the problem is that this is a major part of the tax code.

“It has a big effect on people’s lives and the clock is ticking because by April 6 people are going to have to make major decisions about whether they think they are going to pay more tax or not.”

Later, speaking during a visit to China, the CBI chief told Dow Jones that he was not aware of any talks between business groups and the government on the issue in the past few weeks.

He added: “They’ve got quite a lot keeping them busy at the Treasury, but that’s not a reason for keeping a major piece of the tax code in a state of complete uncertainty.”

Mr Darling announced last October his plan to create an 18 per cent CGT rate, scrapping the 10 per cent rate for those who held their assets for a number of years.

The effective 80 per cent tax rise for some entrepreneurs caused outrage and has already prompted a partial retreat: a commitment by Gordon Brown that relief would be available for retiring entrepreneurs.

Mr Darling has promised to look at other changes to the scheme, although he insists the move to a “simplified” system with a single 18 per cent rate would be retained.

The protracted delay in announcing a revised scheme has prompted speculation in the City that CGT reform might be delayed by a year. The Treasury denies that outright.

Government insiders say they do not expect a decision this week, while leaving open the possibility it could come next week after Mr Brown returns from a visit to Asia.

Mr Darling’s aides say he wants to make sure he gets the solution right, arguing that different business lobby groups have called for different reforms.

George Osborne, the shadow chancellor, seized on Mr Lambert’s remarks as further evidence of what he sees as government indecision and drift.

“Now we can clearly see the damage done by the economic incompetence of the prime minister and his dithering chancellor,” he said. “They have left British business paralysed by indecision at the heart of government.

“Gordon Brown talks about the long term but he can’t even tell us what the business tax regime is going to be like in three months’ time.”

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