Governments can be guilty of some astonishing lapses of clear-headedness.

At a time when the economy seems to be closing in around so many companies, forcing them to look hard at how to achieve economies, when government itself claims to recognise the need to do what it can to mitigate the burdens on business, it is blindly forging ahead with proposals that threaten to hit companies just when they need help. I'm talking about the government's stubborn refusal to withdraw the tax on empty properties.

The case for reintroducing greater relief on empty properties could not be clearer. Companies up and down the country are suffering from the impacts of the credit crunch, reduced consumer demand, and commodity price inflation.

Any business attempting to downsize in an effort to survive will be penalised by the hike in empty property rates. The Government calculated that this tax would raise £900m per year - but that was based on last year's outlook.

The amount of empty property has increased because of the downturn so the tax is now expected to raise £1.2bn per year.

This goes to the heart of this problem - the more business suffers, the more money is raised.

The CBI has heard cries of anguish not just from the property sector but also from tenants that are tied into leases and from SMEs that are unable to move to more suitable properties directly as a result of the tax.

Fortunately, the Government did recognise that its policy on empty rates is not appropriate in all circumstances. It gave itself power in the legislation to reduce the rates by up to 50 per cent at times of economic hardship. This time has surely come.

The CBI has argued from the beginning that the reduction in empty rate relief was a misguided policy.

First, landlords do not deliberately leave property empty.

Second, rather than reducing rents, its real effect will be to raise the cost of development and reduce the amount of property on the market.

Basic supply and demand suggests that this will push up rents in the long-term.

The CBI will continue to stress the harmful consequences of the policy and urge the Government to reconsider, but this would require new legislation and urgent action is needed today.