The Institute of Directors has urged the Government to kick-start economic growth with radical tax changes.

In its 2011 Budget submission the IoD says there is a need to "improve substantially the competitiveness of the country by killing the growing perception that the UK is a high tax economy".

It says the proposals would involve either little or no cost over the course of the Spending Review. And, where more significant commitments beyond 2014-15 cut in, even then it is "easily manageable providing there is restraint in the growth of public spending".

Commenting on the IoD tax proposals, regional chairman John Rider said: "Since there is little money in the Treasury's coffers many people are assuming that there's not much George Osborne can do in the Budget to kick-start economic activity and strengthen the recovery. They couldn't be more wrong.

"Now is the time for the Government to signal in the strongest possible terms its determination to make the UK one of the most tax competitive countries in the world.

"The Chancellor can send this signal by announcing that the 50 per cent income tax rate will be abolished by 2014-15, and Corporation Tax will be reduced to 15 per cent by 2020. This is one of the areas where deep cuts in rates could transform business behaviour, raise more revenue in the long term and help create much needed jobs.

"By making these statements on Budget Day the Government would be sending a clear message that this country is open for business. This has the potential to boost business confidence and increase inward investment into the UK. We can't afford to make all these tax changes today, but signalling tax cuts for tomorrow could still boost business confidence."

The IoD is also arguing for reversing withdrawal of the personal allowance on earnings above £100,000 and introducing an exemption from future Capital Gains Tax for entrepreneurial investments.