Report Reveals UK Tax Burden 18% Higher than Global Average
The UK tax burden as a share of the economy is close to a fifth higher than world averages, which may impede growth and stifle entrepreneurship, a new report has claimed.
Tax revenue is 32.9% of the GDP, compared to 27.8% which is the worldwide average. This makes the tax level in the UK several percentage points higher than those of Australia, Israel, and Japan, and more than 25% higher than the US, which is 25.4%.
The report went on to warn that higher taxes will reduce incentives for wealth creation and investment, and could encourage larger businesses to seek out lower tax bases.
Ireland has the lowest tax burden in Western Europe, and saw its economy grow by almost 5% last year, compared to the 2.6% growth in the UK. Several major US companies have headquartered their international operations in Ireland, such as Google, Apple, Facebook, Microsoft & IBM.
Unless the UK addresses the large tax burden, the British economy may find itself pressured by Eastern European countries which have lower tax and can also offer strong manufacturing skill bases.
Roy Maugham, tax partner at UHY Hacker Young, said, “Unless the UK addresses its weighty tax burden, the British economy could find itself under pressure from both lower tax Eastern European countries that are able to offer equally strong manufacturing skills bases and global cities like Singapore, Dubai and Qatar that are consciously targeting the industries that create the most wealth.”
Countries from Central and Eastern Europe have an average tax income representing 25.9% of GDP, while Singapore and the United Arab Emirates have relative tax revenues of 15.1% and 2.7% respectively.