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…
Bad news for fans of economic growth this week as the US-based Tax Foundation release their International Tax Competitiveness Index, which ranks 38 OECD countries on how pro-growth their tax systems are. The UK has dropped another 3 places from last year to reach 30th out of 38 in the rankings. Canada and Germany are well ahead at 15th and 18th places, as are the United States and Japan. The only silver lining – France and Italy are still below us…
The Tax Foundation’s analysis shows that the UK is competitive on cross-border tax rules but falls short on pretty much every other metric, with above-average top-rate income tax rates and the highest real property tax burden in the OECD. Sunak and Hunt’s corporation tax hike has pushed us down 17 places in that category. Tom Clougherty at the CPS notes that we’ve “gone from having the 4th lowest headline rate in the OECD to the 21st“. Hardly a prelude to growth…
