Government plans to let local authorities levy a tax on businesses to pay for infrastructure projects could send companies to the wall, the Confederation of British Industry has warned.

A third hearing on the Business Rates Supplement Bill is due to be heard tomorrow at the House of Commons. The bill is set to take effect in April 2010 and allow authorities to levy a 2% business rateon to fund large infrastructure projects such as Crossrail.

The rate is expected to apply to businesses with a rateable value of more than £50,000, though this has not been set in the legislation.

The CBI is calling for an amendment to give businesses a vote on any proposed levy. The bill does not include a vote as the government is thought to be concerned that giving businesses a vote could act as a veto on any proposed levy.

John Cridland, CBI Deputy Director-General, said: 'The Business Rates Supplements Bill is designed to help fund projects that benefit local economies, but may back-fire in its present form. It risks placing extra burdens on firms that are fighting for survival, and could lead to more firms going bust. It also risks taxing business for projects that are not what local economies need.'