The Institute of Directors has called on the Government to cut Corporation Tax in order to stimulate economic activity and boost competitiveness.
The call came as its rival, the CBI, attacked Chancellor Gordon Brown over stealth taxes disguised as a 'tax avoidance' crackdown.
IoD West Midlands chairman John James said: "The time is right to make a two per cent cut in Corporation Tax - we have made the calculations and there is clear scope to make this reduction.
"The corporate tax advantages once enjoyed in the UK have slipped over the last few years and major economies such as Germany, France and Italy have all reduced their rates whilst ours has remained the same. If we are to remain competitive we must act now."
The IoD proposes that the standard rate of Corporation Tax should be reduced from 30 per cent to 28 per cent in the Budget next week - a move worth £3 billion in 2007-08 to be financed through tax simplification.
Other proposals contained in the IoD's 2006 Budget sub-mission include the introduction of Regional Comprehensive Spending Reviews aimed at root and branch reform of public spending in the regions, and an annual statement to Parliament on the costs of unfunded public sector pension obligations.
On public spending, Mr James said: "This needs to be brought under control because unless we tackle the problem now, it will only get worse. Public spending and taxation are going up in the UK as a percentage of GDP and the competitive edge we once had is rapidly disappearing or already has."
The CBI agreed, claiming the Government was adding to the business burden when it should instead be reducing it.
Calling for an easing back of the rate of growth in public spending and for a modest reduction in business taxation, the CBI claims the cumulative effect of post-1997 business tax rises is expected to hit £80 billion by 2010.
The overall tax burden in the UK had risen from 34.7 per cent in 1996 to 36.1 per cent in 2004 and was expected to grow further to 38.5 per cent by 2008 - already higher than that of the US and Ireland, and set to overtake Germany and the Netherlands.
John Cridland, CBI deputy director-general, said: "Our competitiveness is seriously at risk, and as competitor economies reduce their rates of corporation tax, globally-mobile international businesses will increasingly look overseas."
The CBI is again urging the Government to make cost savings, rising to £10 billion by 2 007/8, through wage restraint in the public sector together with bringing absenteeism down to private sector levels, and cutting the benefits bill.
Ian McCafferty, CBI chief economic adviser, said: "A straightforward across-the-board reduction in a major business tax rate - either lower corporation tax rates or a reversal of the 2002 hike in employer National Insurance Contributions - would help business grow and invest, and s end a powerful signal internationally."
The CBI also attacked 'anti-avoidance' measures being introduced by the Treasury, saying the Treasury was simply using it as an excuse instead of acknowledging that its tax revenue projections had been over-optimistic.
Mr McCafferty said: "No one is arguing that companies should be allowed to cheat the tax system. The problem is that the tax system is increasingly cheating companies. Stealth taxes on business, introduced under the cloak of the 'anti-a voidance' banner, are increasingly being introduced without consultation, sometimes having retrospective effect, and are serving to further undermine the UK's competitiveness and reputation as an international business location."
Mr Cridland said: "The Government has been attempting to play the 'moral card' on so-called tax avoidance during the past two to three years. But it cannot have its cake and eat it. Legitimate tax planning should not be overturned on a Treasury whim."