The Confederation of British Industry (CBI) has attacked the government’s record on business taxation, claiming that the UK’s competitiveness is being harmed by ministers “heaping more costs on companies.”

In a new report, the CBI calculated that the annual tax bill for UK businesses will by £7.6 billion higher by 2006, due to Budget decisions made by the government since 1997.

The CBI said that, in three years time, the cumulative total of taxes on firms is set to be a staggering £54 billion since Labour came to power.

The report argued that high taxes were damaging UK competitiveness with other EU countries, and rejected the “popular notion” that the tax burden in Britain was lower than in other countries.

According to figures in the CBI’s study, the UK’s main business taxes, such as National Insurance Contributions, business rates and vehicle and fuel duties, accounted for a 9.9 per cent share of the national GDP – a level above average when compared with Britain’s main trading partners.

The CBI said that British business tax was “on a par” with Germany and the Netherlands, but was worse that the USA (7.3 per cent of GDP), and Ireland (7.2 per cent).

Of the UK’s main trading partners, only France, with 14.4 per cent of GDP going on business tax, is in a worse position.

The business lobby group said that there will now be a “concerted business campaign” to change government policy on business tax due to Treasury “indifference” to the problem and accusations that firms were “crying wolf” over the burden.

The CBI pointed the finger at increased “minor” business taxes – such as stamp duty and environmental costs – for piling pressure onto UK firms.

Taxes not linked to profits and the complexity of the entire taxation system were also blamed for damaging businesses.

According to the CBI report, the government should halt the rise in business taxes, reduce compliance costs and make charges fairer by rooting out anomalies.

Digby Jones, director-general of the CBI, said that the UK is not as good as it thinks it is on tax competitiveness and is certainly not as good as it should be.

“The report illustrates why so many business leaders are increasingly alarmed by the worsening situation and why the government’s indifference is so frustrating.

“Their concerns matter to everyone – jobs and this country’s future depend on them.

“Don’t look at the rate of tax, look at the total figures on the tax bill. Many countries give allowances and relief that result in a lower tax take than the UK,” he said.

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