Nikesh Arora, vice-president of European Operations for Google, speaks at the annual Confederation of British Industry conference in London, Monday. One in five companies have relocated some of their activities overseas and a third are considering it because of gripes over tax, according to a poll by the Confederation of British Industry published on Monday. - Reuters

LONDON, United Kingdom (Reuters):

One in five British companies has relocated some of its activities overseas and a third are considering it because of gripes over tax, according to a Confederation of British Industry (CBI) poll published Monday.

Britain's biggest business lobby group said its survey of 87 companies showed 71 per cent wanted lower corporation tax, as it began its annual two-day conference a week before Chancellor of the Exchequer Gordon Brown's pre-budget report on Dec. 6.

"Our survey shows that business leaders believe the U.K.'s corporate tax regime is more burdensome than it was five years ago, and that this is making the U.K. less attractive as an international business location," said CBI Director General Richard Lambert.

The survey also showed nearly 20 per cent of companies had considered moving their headquarters abroad.

The CBI called on Brown, who is expected to take over from Tony Blair within a year, to cut companies' tax bill by £2 billion (US$3.9 billion) in 2007/08 and then repeat the reduction annually to achieve a cut in the corporation tax rate to 25 per cent by 2011 from 30 per cent now.

Prime Minister Blair announced plans to cut the regulatory burden on companies by a quarter when he addressed the CBI conference for the last time on Monday.

Burden of regulation

"In the next few weeks we will be setting out plans for government departments to take a 25 per cent cut in the burden of regulation," Blair said. "I think it's important we go through this item by item," he said, adding the government would work closely with business to push though the changes.

Brown, who addressed the CBI conference on Tuesday, promised greater investment in education, innovation and infrastructure in order to help Britain better cope with the forces of globalisation.

Speaking alongside U.S. Treasury Secretary Henry Paulson, Brown also repeated his call for urgent action to restart world trade talks and resist calls for protectionism.

"And I will continue with my programme of making government decision-making independent of short-term political pressures by making not just interest rate decisions independent but also competition policy, statistics policy and much of industry policy," he said.

But government sources say big changes in headline tax rates are very unlikely in the pre-budget report.

Opposition Conservative Treasury spokesman George Osborne also spoke at the CBI conference on Monday, stepping in for party leader David Cameron who pulled out at the last minute to visit British troops in Iraq.

Climate Change

But Osborne sidestepped the issue of corporation taxes and instead outlined plans to replace the existing Climate Change Levy on fuel with a carbon tax, whose rates would be more closely linked with carbon emissions and is intended to be revenue neutral for companies.

"We want to shift the tax burden away from income and investment and onto pollution. Pay as you burn, not pay as you earn," Osborne told the conference.