A Conservative peer has called for capital gains tax (CGT) to be abolished.

Howard Flight's extraordinary claim was made in a research paper issued by the right-leaning Centre for Policy Studies.

But the report, written by Flight and economist Oliver Latham, urges the government to start by slashing the rate to 25% or less before continuing to prune the rate until it eventually hits a zero banding and effectively disappears.

The paper claims that even under pessimistic predictions, a return to an 18% rate would only hit the public purse by between £300m to £900m - between 0.05% and 0.15% of total government revenue.

It says wealthy economies like Switzerland, Singapore and Hong Kong have no capital gains tax, while the UK's 28% rate makes it one of the highest of the developed nations.

The tax discourages entrepreneurship, savings and investment, thus harming growth, the report argues.

The report's release follows in the wake of fellow Tory and ex-cabinet minister Liam Fox's claim in The Times that the Coalition would lose the next general election unless it took big risks to restore economic conditions by among other things, scrapping CGT for three years.

But the call from Fox - who resigned in October last year after embarrassing revelations about the lobbying activities of his close friend Adam Werrity, who he gave unprecedented access to the heart of government and to British defence strategy, has been derided by a member of the UK200Group of independent accountancy and law firms.

Cormac Marum, head of tax advisory at Harwood Hutton said: 'Any suspension of capital gains tax would be very costly to the Exchequer. The cost would not be limited just to the anticipated capital gains tax revenues for the three years in question but would wipe out the future anticipated tax revenues from the gains accrued up to the end of the holiday period. This is because everyone would 're-base' their chargeable assets during the holiday period and wipe out tax-free all of the historic growth in value up to that date.

He said HMRC would pan the plan as they would 'react by arguing that sales are revenue in nature rather than necessarily capital'.

'In the property sector, expect more emphasis on the anti-avoidance "transactions in land" rules which allows capital gains in certain circumstances to be taxed as income,' he added.