Even the tax-grabbing fanatics at the Treasury have to face the truth. A Freedom on Information Request has revealed that internal Treasury briefings are making quite the case for a low-tax economy. A document from January this year, delivered to Jeremy Hunt, makes the statistical case. It’s a shame none of its lessons made their way into the budget…
While the Treasury claims that “there have been many important factors affecting advanced economy growth rates“, it is forced to admit in its analysis that “over the 2010-22 period, OECD economies with higher total tax (as a share of GDP) have on average seen lower cumulative GDP growth.” A phenomenon that has been observed for hundreds of years…
“This association applies whether looking at (1) all OECD economies; (2) removing some extreme outliers (Ireland, Turkey, and Greece); (3) removing all OECD economies that are not considered “advanced” by the IMF; and removing Ireland and Luxembourg given their unusual tax policies (presented in the below chart and table) and (4) considering just the G7 and Spain.“
The briefing established what people have been saying for years – that top performers have lower tax burdens: “The US and Canada saw the fastest GDP growth over in the G7 between 2010 and 2022, with the 1st and 3rd lowest tax burdens in the G7.” Any chancellor who wants to deliver a ‘Budget for Long Term Growth’ might take note…
Read the full Treasury briefing below:
