Britain’s oppressive tax system could put the kibosh on future economic growth, causing the country to slip further behind its global competitors.
Accountancy firm UHY Hacker Young reveals that the UK’s effective tax rate of a third of GDP (32.9%) runs a full 19% higher than the global average – well ahead of the US, Ireland and Japan. The company warned that Britain could face stiff competition from Eastern Europe and emerging cities like Dubai if it fails to address this “weighty” burden.
Despite the gloom, the UK still has the better of its European neighbours. The study found that around 40% of the EU’s GDP goes over to national governments through taxation.
Roy Maugham, tax partner at UHY Hacker Young, said: “While our tax burden compares favourably with some of our Western European neighbours, that is not where the most intense competition is coming from. It needs to be a clear ambition to make our economy globally competitive by keeping a close eye on the overall tax take – perhaps even setting a specific target.”
He added that this commitment should be balanced by efforts to ensure public spending delivers value for money, and urged political parties to be more open about how much tax they want to take as they fight for the nation’s vote.
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