The CBI has launched a new report warning that the business tax burden will rise by £54 billion between 1997 and 2005/06.

The report is part of a concerted business campaign to change the strategic direction of government policy, which the CBI says has until now focussed on raising company tax to fund public services

As a result of Budget measures since Labour took office in 1997, the cumulative effect of tax increases for companies will have totalled £54 billion by the year 2005/06.

Such an increase places the UK on a par with Germany and the Netherlands, but worse than the US and Ireland, according to the report, and only France has a higher tax burden.

Additionally, the study claims that the position of British businesses is worsening as only the UK and the Netherlands are increasing the business tax share as a proportion of GDP.

"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," warned CBI director general Digby Jones.

"This report illustrates why so many business leaders are increasingly alarmed by the worsening situation and why the government's indifference is so frustrating."

Jones said the tax rises could deter the people who make the decisions about where to put investment or whether to move to a more competitive tax environment.

"Capital can quickly drain away from uncompetitive investment locations and once gone it may never return," he said.

"Better public services will come from better utilisation of government resources, not simply by paying more."

Shadow chancellor Michael Howard highlighted the report as evidence of Treasury failures.

"This is further confirmation of the burdens this present government has placed on business," he said.

"This makes it incredibly hard for British businesses to win orders and create jobs.

"Our competitive advantage over the rest of Europe has been undermined and it is little wonder that business investment fell more sharply last year than it has over a decade.

"This is more evidence that this government is taxing, spending and failing."

Liberal Democrat Treasury spokesman Vincent Cable called for greater simplicity in the tax system.

"Business must make its tax contribution just like other parts of society, but the burden must not be so onerous that it retards growth and new jobs," he added.