UK faces tax burden 76% higher than major emerging economies

Written by Adam Cadle
19/03/2018

The UK has a tax burden of 38% of GDP, 76% higher than the average rate for the major emerging BRIC (Brazil, Russia, India and China) economies (21.8%), research has shown by accountancy group UHY Hacker.

The UK government’s tax take is also 36% higher than the global average (28.2%), the study showed.

The firm studied 35 countries around the world, calculating what percentage of that country’s GDP is taken by the government in tax and the UK ranked in seventh place.

Generally, European economies dominated the top of the table of the highest taxes. European countries, on average, have a tax burden of 43.3%: over 50% higher than the global average (28.2%) in the study. Denmark came top of the study with the government’s tax take representing 53.5% of total GDP.

The G7 average of 31.1% is closer to the global average with the USA (22%) and Japan (34.4%) seeing lower tax takes than their European competitors.

Emerging economies in general have seen much lower levels of government tax ‘take’, including many in the ASEAN (Association of Southeast Asian Nations) trading bloc such as Malaysia (16.5%) and the Philippines (13.9%).

Tax partner Darren Grimes said: “Lowering the high burden of taxation could act as a competitive differentiator for the UK post-Brexit.”

“A lower tax burden could increase the UK’s attractiveness to foreign-based businesses on the global stage compared to other developed nations.

“Recent reductions in corporation tax have helped, but policymakers need to resist the temptation to backtrack on this as we look ahead. Securing favourable customs tariffs is also clearly top of the list of priorities as Brexit approaches.

“However, the UK may need to think even more creatively if it is to make a real difference.”

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