The CBI will today (Monday) throw down the gauntlet over a £54bn increase in the business tax burden as part of a bid to stop the government heaping more costs on companies.
It will launch a hard-hitting report on corporate taxes, which challenges the popular notion that the UK burden is lower than international competitors.
The report is part of a concerted business campaign to change the strategic direction of government policy, which until now has focussed on raising company tax to fund public services.
Companies asked the CBI to prepare an authoritative business response to Treasury "indifference" on the issue and arguments that firms are "crying wolf" over the impact.
The report says that, by 2005/06, the total annual tax bill for the business sector will be some £7.6bn higher as a result of Budget measures since 1997. Under this government the cumulative total will be £54bn by 2005/06.
The CBI cites OECD statistics showing the business tax burden is not low compared to international competitors, contrary to popular belief.
As a share of GDP, Britain's main business taxes - tax on profits, employers' NICs, business rates and vehicle and fuel duties - stand at 9.9 per cent, just above the average of all its main trading partners.
The UK is on a par with Germany (10.1%) and Netherlands (9.7%), but worse than the US (7.3%) and Ireland (7.2%). Only France takes a significantly higher share (14.4%).
In addition, the UK's relative position is worsening - of our main trading partners only the Netherlands is increasing the share of business taxes as a proportion of GDP.
Digby Jones, CBI Director-General, said: "The UK is not as good as it thinks it is on tax competitiveness and it's certainly not as good as it should be.
"This report illustrates why so many business leaders are increasingly alarmed by the worsening situation and why the government's indifference is so frustrating. These are the people who make the decisions about where to put investment or whether to move to a more competitive tax environment.
"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."
In addition to main business taxes, the report shows all other business taxes and tax-related costs are on the rise. It also highlights anxiety about the balance and complexity of taxation.
Minor business taxes - such as stamp duty and environmental taxes - are increasingly important, tripling as a share of GDP since 1995. By 2005/06 the annual increase will have risen to £2.8bn because of Budget measures since 1997. This trend towards increases in minor business taxes and other charges outstrips that in other countries.
Taxes on investors are also on the rise, a trend that will stunt business growth says the CBI. The biggest concern is the £5bn annual cost of the government's Dividend Tax Credit. Ministers intend to make this problem worse by removing the Credit from Peps and Isas.
The cost burden on business has been further exacerbated by higher pension contributions, which have risen steadily since 1995 and particularly rapidly over the past two years.
The CBI criticises the shift from taxes on profits to taxes unrelated to profits, such as labour or energy - a good example being the recent increase in National Insurance contributions. Its report says three-fifths of business tax revenues are now totally unrelated to affordability.
The complexity of the tax system is also seen as an increasing problem, although this is the case in France, Germany and the Netherlands as well the UK.
The CBI uses the report to call on the government to hold down the business tax burden, reduce compliance costs and root out tax anomalies.
Digby Jones said: "The need to fund public services and the need to restrain business taxation are not incompatible. Capital can so quickly drain away from uncompetitive investment locations and once gone it may never return. Better public services will come from better utilisation of government resources, not simply by paying more."