CBI warns Brown of UK tax burden

The CBI has hit out at what it has labelled "stealth taxes" disguised as a 'tax avoidance' crackdown on businesses.

The CBI warned today that the UK is losing its competitiveness as it slips down the international tax table, and that rising Government levies are stifling business investment.

The employers' body hit out at 'stealth taxes' being introduced under the cloak of tax revenue protection or 'anti-avoidance' measures.

In its representations to the Chancellor ahead of the Budget, the CBI warned that at a time of intense cost pressures and fierce international competition, the Government is adding to business costs when it should instead be reducing the burden.

The CBI has called for an easing back of the rate of growth in public spending and for a modest reduction in business taxation, pointing out that business has been funding a disproportionate share of rising Government spending - with the cumulative effect of post-1997 business tax rises expected to hit £80 billion by 2010.

Analysis by the CBI showed that Government consumption as a percentage of GDP rose from 18% in 1998 to almost 22% in 2005. This increase of a fifth is mirrored by an almost exact percentage fall in business investment as a share of GDP over the same period.

CBI Deputy Director-General John Cridland said: "With a staggering £80 billion in extra tax expected to have been levied on companies and their investors by 2010, plus spiralling energy and pension costs, it is hardly surprising that business investment has hit a record low.

"The problem for Government is that lower investment by firms spells lower growth and prosperity, and eats into the very wealth which public services depend on for funding over the long term."

The CBI claimed that the overall tax burden in the UK has risen from 34.7% in 1996, to 36.1% in 2004, and is expected to grow further to 38.5% by 2008.

(SP/GB)