No cuts required for £8bn tax reduction, claims CBI

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The Independent Online

The CBI will today use its annual conference to demand an £8bn tax cut for business and a radical overhaul of the UK's "hair-raising" regulatory regime.

It warned that as many as 21 of the UK's largest 350 companies were considering moving their headquarters overseas, based on the findings of a survey of business leaders. And it denied that its message on tax, red tape and relocation was a "broken record", saying that such concerns risen over the past three years.

The CBI's conference, being held in London today and tomorrow, will hear speeches from the Conservative leader David Cameron and the likely next Labour leader, Gordon Brown.

In an interview with The Independent last week, Richard Lambert, the CBI director-general, said he wanted to be convinced of Mr Cameron's commitment to the business agenda.

However, the survey showed that the corporate community is growing increasingly disenchanted with the Chancellor. The poll of 87 executives at FTSE 350 companies showed business leaders believed that the UK's corporate tax regime was worse than it was five years ago.

Two-thirds of respondents were dissatisfied with the overall approach to tax while more than nine out of 10 said the compliance burden needed more thought.

It said two companies had already moved overseas and a further 6 per cent - or 21 companies - were considering relocation. "That would pose a threat to the corporate tax revenue stream," said Ian McCafferty, the CBI's chief economic adviser.

Mr Lambert told journalists ahead of today's conference that businesses wanted a "straightforward cut" in taxes and a reform of legislation and regulation, some of which, he said, "makes your hair stand on end".

"It is important to be absolutely clear who pays for high business taxes - they fall on consumers in the form of higher prices that companies need to pay their increased costs," he said. "High business taxes are not a way of making 'fat cats' squeal. They are a burden carried by the whole of society."

He urged the Chancellor to use next month's pre-Budget report to signal a willingness to cut tax and red tape. He outlined spending efficiencies that would generate tax reductions of £2bn next year, rising to £8bn in 2011, by slowing the growth of spending rather than making actual cuts.

The CBI warned before its 2003 conference that the burden of regulation could force companies to relocate. Mr Lambert denied that increased employment and the rush of foreign companies to London showed it had "cried wolf". He said: "I don't think it's a broken record ...If anything it is clear that the problem has become larger."