Analysis - Call on chancellor to cut business taxes by £2bn.

The Confederation of Business Industry is hoping Gordon Brown will use this Budget to cut the business tax burden by more than #2bn, in a bid to encourage investment and safeguard the UK’s competitiveness.

CBI chief Digby Jones said it was imperative the government ‘jealously guard its position’ as a global centre for foreign investment.

And when asked about the impact on the Budget from the looming election, Jones said the CBI regarded ‘business and people as one and the same’ adding that taxpayers would only see benefits if the government responded to the needs of UK plc.

‘We expect the chancellor to act prudently, despite it being an election year,’ Digby Jones, director general of the CBI told AccountancyAge.com.

He called on Brown to offer companies greater incentives to invest, including ending confusion over the double tax relief and addressing the UK’s relative shortfall in research and development relief.

Chief economist Kate Barker said the CBI recommended an increase in the R&D tax credit. She added that stamp duty on commercial property was proving a discouraging factor to SMEs looking to move premises and buy assets from other companies.

In another proposal to encourage the growth of SMEs, the CBI said first-year capital allowances should be raised from the current 40% level.

The CBI again reiterated its concern over the climate change levy, due to be implemented in April. While it remained in favour of the tax in principle, it said the chancellor had to ensure that it was implemented in a manner that was fair and would in no way harm competitiveness. ‘The government stance on the CCL – that it is tax neutral – is no longer an acceptable explanation,’ Barker said.

The CBI’s website is at www.cbi.org.uk.