CBI calls for business tax reduction

The rising burden of taxes is leading to UK businesses losing their competitive edge, the Confederation of British Industry has warned.

The CBI launched an attack on 'stealth taxes', which it said where being introduced by the government under the guise of tax revenue protection or 'anti-avoidance' measures.

In its recommendations to Chancellor Gordon Brown ahead of the Budget later this month, the CBI warned that at a time of intense cost pressures and fierce international competition, the government was adding to business costs when it should instead be reducing the burden.

The CBI said that business had 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. It called for an easing back of the rate of growth in public spending and for a modest reduction in business taxation.

John Cridland, CBI Deputy Director-General, said: "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 called for a straightforward across the board reduction in a major business tax rate - either lower corporation tax rates or a reversal of the 2002 increase in employer National Insurance contributions.

Responding to the CBI's comments, the Treasury said that since 1997, the government had reduced corporation tax to 30%, its lowest ever rate.

(KMcA/SP)