Bad news for fans of economic growth this week as the US-based Tax Foundation releases their International Tax Competitiveness Index, which ranks 38 OECD countries on how pro-growth their tax systems are. The UK ranks a shameful 30th place, now lagging behind the likes of Hungary (7th), Czechia (8th), and even Germany (15th). So much for lofty promises of making Britain an “attractive” destination for investors…
Since 2021, our corporate tax competitiveness has nosedived 18 places, thanks to Sunak hiking it to 25% – a rate that’s set to stay. Things are poised to get worse, with the Tax Foundation and Centre for Policy Studies sounding the alarm that Reeves’ upcoming budget could see the UK tumble even further down the rankings to 35th place if hikes in capital gains tax, dividend tax, or the dreaded wealth tax materialise. Just four spots from the bottom, alongside France, Italy, and Colombia. Hardly a prelude to growth…
Daniel Herring of the CPS warned:
“In short, there is a real danger that we could end up with the least competitive and most anti-growth tax system in the OECD. The UK’s ranking shows that the way we raise tax is damaging incentives, getting in the way of innovation and undercutting productivity.”
Right on the money…
Meanwhile, capital is already streaming out of the country, and businesses are fleeing in droves. These latest figures aren’t the siren calls that will bring investors flocking…
The Organisation for Economic Co-Operation and Development (OECD) has predicted that the UK will be the slowest-growing economy in the G7 next year. All thanks to our so-called Conservative government’s high taxes and borrowing…
The OECD has forecast that the UK’s GDP will rise by just 0.4% this year and 1% in 2025, nearly half that of the US. The OECD said “tax receipts keep rising towards historic highs of about 37% of GDP” and Hunt’s NI cuts “only partially offsets the ongoing fiscal drag from frozen personal income tax thresholds”. They also blast the increased corporate tax rate (from 19% in 2021 to 25% now). Higher taxes and borrowing does not promote growth, Chancellor…
Meanwhile, the ongoing decline of the London Stock Exchange’s is a matter of huge concern for those in the City. British success stories like chip-maker ARM and entertainment group Flutter have listed outside the UK thanks to regulations and high taxes. Hopefully Labour can learn a few things from the Tories’ mistakes…
New figures from the Organisation for Economic Co-Operation and Development (OECD) show the UK’s tax-to-GDP ratio rose to 35.3% in 2022/2023 – the highest since their records started in 2000. That’s a 0.9% increase from last year’s 34.3% record from last yet. As the government rakes in increasingly gargantuan amounts we’re slipping down the tax competitiveness rankings…
This comes after the OECD downgraded our growth forecast and recommended that Sunak ease fiscal pressure and quickly implement supply-side reforms to get some life out of the economy. The OBR’s current statistics show us headed towards a 37.7% ratio in five years, which would beat even post-war highs. The Treasury continues to insist “the UK tax system is highly competitive“, which no one believes. Meanwhile we can’t even call HMRC any more…
As Hunt appears before the Treasury Committee for his Autumn Statement grilling he’ll have some grim reading from the Organisation of Economic Co-Operation and Development (OECD) under his arm. New forecasts today have the global economy performing better than expected – just not the UK. Britain’s 2023 growth is expected to sit at 0.5%, while the forecast for 2024 has been downgraded from 0.7% in the OECD’s September interim report to 0.6%. Growth in 2025 is predicted to pick up to only 1.2%. Meanwhile, expected inflation is uprated to the highest in the G7…
UK growth is coming in at well below the G20 and OECD average of 1.4%, and in 2024 only Argentina and sluggish Germany will perform worse. Recommendations include “reforming the costly triple lock uprating of state pensions” and considering the fact that “fiscal pressure on households and businesses has increased significantly” from stealth tax rises.The OECD is warning Sunak to”swiftly implementing planned supply-side reforms to boost potential growth“. Or face doom…
The Organisation for Economic Cooperation Development (OECD) forecasts UK inflation to fall back to 2.9% next year… although this year’s figure is set to average 7.2%, the worst in the G7. At least Rishi is on target to meet one of his pledges by Christmas…
The OECD also expects the UK to hit average growth of around 0.3% this year, up to 0.8% in 2024. Better than Germany… although still small beer. Jeremy Hunt is instead pointing to the IMF figures to cheer everyone up:
“Today the OECD have set out a challenging global picture, but it is good news that they expect UK inflation to drop below 3 per cent next year. It is only by halving inflation that we can deliver higher growth and living standards. We were among the fastest in the G7 to recover from the pandemic, and the IMF have said we will grow faster than Germany, France, and Italy in the long term.”
In the meantime, the Bank of England could hike interest rates to 5.5% on Thursday…
Jacob Rees-Mogg is the face of a new Adam Smith Institute campaign against a global minimum corporation tax, which threatens to undermine levelling up. As Chancellor, Rishi Sunak spearheaded the international campaign for a global minimum corporation tax of 15%, set to come into force this year. And he claims he’s a Thatcherite…
A new report from the ASI published today, however, finds that the policy threatens the very levelling up agenda the current government were elected on; undermining key areas of UK tax policy including investment zones, free ports, business tax credits and the super-deduction policy the Prime Minister so keenly championed. Rees-Mogg adds that the policy will also level down the wider global economy…
“Tax competition between countries keeps rates low and increases prosperity. Agreeing high rates among a cabal of developed nations will keep the world poorer.”
The report points out the ideological inconsistency of a government that champions taking Britain out of the EU, only to then sign away our financial independence via a new OECD treaty. It particularly threatens investment zones and freeports – the latter being one of the only policies Rishi Sunak can point to as proof of his pro-Brexit credentials…
“because the Pillar Two rules permit a carve-out from included income equal to 5% of eligible payroll costs—including payroll taxes paid by the employer—the interaction of the new tax rules with investment zone incentives could perversely result in higher top-up tax liability owing to lower payroll costs in the zones. This would tend to disincentivize investment and employment in investment zones and freeports.”
Just another day of a Conservative government forgetting what Conservatism means…
Read the report in full here.
