A business organisation has added its voice to the chorus of disapproval over Chancellor Alistair Darling's plans to abolish capital gains tax relief.

Sussex Enterprise is urging the Government to reverse its decision to scrap so-called taper relief in April next year.

Labour wants to introduce a flat rate of 18 per cent, rather than the taper system which can be as low as ten per cent depending on the age of the business being sold.

The aim was to prevent private equity companies paying as little as ten per cent capital gains tax on huge profits.

Business leaders say the move will hit smaller companies and discourage entrepreneurism.

Mark Froud, the chief executive of Sussex Enterprise, has signed a letter addressed to the Chancellor, along with over 50 other chambers of commerce, to show the strength of feeling against the new regulation.

He said: "The pressure is mounting on the Government to reverse its decision on capital gains tax. A flat rate of 18 per cent tax will do nothing to encourage entrepreneurship.

People who have worked hard over many years to build their business will now be slapped with a much higher tax bill.

"The current system of ten per cent taper relief is a fairer way of rewarding people that have invested heavily. By working with the British Chambers of Commerce, the chamber network and other business support groups, we hope to make the Chancellor see sense, and reconsider his decision."

Malcolm Bradshaw, managing director of Shep Plastics in Hailsham, said: "The capital gains issue is another example of this Government seeing small businesses as easy picking for taxation.

The taper relief was an incentive for owner managers to plan a disposal and recognise the years of effort in building a business.