THE CBI has turned up the volume in its plea to Gordon Brown for an across-the-board cut in business taxes, arguing that changes to the tax code are putting business off investing in Britain.

In its submission to the Chancellor before next week’s Budget, the employers’ group says today that Britain is losing its competitiveness as it slips down the international tax table.

John Cridland, deputy director-general of the CBI, said that companies’ views of fiscal and tax policies had hardened since the Pre-Budget Report. “The concern has mounted amongst British business that constant tax grabs from the Exchequer are weakening our competitive position,” he said. “We have seen clear signs that profitability has peaked.”

The CBI call is mirrored by a plea from the Institute of Chartered Accountants in England & Wales (ICAEW). In its own submission, the institute calls on the Government to set out its long-term tax policy and expectations in the same way that it publishes its comprehensive spending review.

Eric Anstee, chief executive of the ICAEW, said: “Accelerating the rate of economic growth must be the priority for this Budget. One practical step would be to give businesses greater certainty as to the tax burdens they will face.”

The CBI said that business investment growth sank to just 1.6 per cent last year, an all-time low. Investment was suffering from high input prices and the demands of escalating pension costs, but the CBI said that the rising level of spending by the Government was also “crowding out” business investment.

In addition, companies would have had to face tax rises worth a cumulative £80 billion by 2010, the CBI’s report said. At the same time the UK has slipped from twelfth place in the OECD’s international tax comparison table in 1996 to sixteenth in 2004, and is expected to fall to nineteenth by 2008.

The group called on the Chancellor not to raise taxes and instead to consider a cut in the tax burden on companies. It calculated that he could afford to reduce the bill for business by £5.5 billion a year, financed by cost savings through bringing absenteeism down.

The CBI also attacked the drive against tax avoidance. It argued that the Treasury was using the excuse that tax evasion was rising to make up for over-optimistic revenue projections.

Ian McCafferty, the CBI’s chief economic adviser, said: “No one is arguing that companies should be allowed to cheat the tax system. The problem is that the tax system is increasingly cheating companies. Stealth taxes on business, introduced under the cloak of the ‘anti-avoidance’ banner, are increasingly being introduced without consultation.”

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