The Prime Minister, Gordon Brown, defended the decision to scrap the 10% income tax rate by claiming it would make more families better off, despite a backlash from many MPs which has threatened to undermine the move. The FPB believes that politicians should give the same attention to the increase in the lower rate of corporation tax from 19% to 21% in the last 12 months, rising to 22% in April 2009. Conversely, the higher rate, paid by bigger businesses, is being cut from 30% to 28%.

"It is not only lower-income individuals who are being adversely affected by this government's tax regime," said the FPB's Chief Executive, Phil Orford. "Every small business has been targeted by an increase in direct taxation. It is understandable that media coverage has highlighted the burdens for individuals, however, the wellbeing of smaller UK businesses is also being seriously undermined, and all MPs should be aware that their business constituents are also being subjected to an unfair taxation policy. The FPB is urging MPs to listen to the concerns of businesses in their constituencies and campaign against this unpopular tax rise."

Following a survey of the FPB's members ahead of the 2007 Comprehensive Spending Review, 67% of respondents said that reversing the decision to increase small firms' corporation tax would encourage them to reinvest in their businesses, with 49% indicating they would have extra funds to invest in skills and training and 47% saying they would be more likely to seek to grow their businesses.

Further research, carried out at the end of 2007 as part of Referendum, the FPB's quarterly poll of members, revealed that a huge 97% of respondents believed that the Government's tax changes had made the UK a worse place in which to do business.

The FPB is also calling for employers' National Insurance Contributions (NICs) to be reduced. The current NI exemption for holiday pay will be withdrawn from 30 October 2008.

FPB member Tim Rhodes, Managing Director of Skypark Freight in Liverpool, called the Government's tax regime ‘abysmal'.

"They don't seem to be thinking of tomorrow. Small businesses are quite resilient and tend to bounce back, but all of these additional taxes are very trying," he said. "Often, it comes to the point where you ask if it's worth carrying on – we can hold on only for so long, after that, unfortunately, the result will be job losses."