The recent surge in British tax revenue to an all-time high further proves that the Treasury is exerting pressure on hard-working families and businesses.
According to the Organisation for Economic Cooperation and Development (OECD) data, the tax rate increased from 34.4 percent of the Gross Domestic Product in 2021 to 35.3 percent in 2022.
It indicates that the United Kingdom is becoming an increasingly high-tax nation among the 38 OECD countries, rising from the twenty-first to the sixteenth in the rankings.
According to an independent analysis conducted by the commercial real estate firm Altus Group, the United Kingdom has the second-largest property tax rate among these nations, including council taxes, stamp duty, and business rates.
Concerns about Rishi Sunak’s leadership and the Conservative Party’s sluggish performance in surveys ahead of next year likely incense MPs even more, demanding further tax reductions beyond the 2p reduction to national insurance announced in the Autumn Statement.
Firms seeking to invest express growing dissatisfaction with the high business taxes in the United Kingdom, mainly due to the increase in corporation tax from 19 to 25 percent this year.
Stealth Taxation and Public Impact
While there has been no increase in income taxes, millions face “stealth” seizures generating tens of billions of pounds for the Treasury due to the freezing of tax thresholds.
Five years from now, the Office for Budget Responsibility (OBR) projects the tax burden to rise to a level not seen since World War II, at 37.7% of GDP. According to the latest OECD data, Britain has reached another juncture on its difficult path towards a future characterized by high taxes.
For most of the previous quarter-century, the United Kingdom’s tax burden was lower than the OECD average, at 31.1 percent in 2009. The analysis indicates that the United Kingdom’s revenues from personal income, profits, capital gains, and property taxes are notably higher than those of other OECD member states.
International Tax Landscape
However, the tax incidence in the United Kingdom remains considerably lower than that of France (46.1 percent) and Germany (39.3 percent) but significantly higher than the United States’ 27.7 percent.
According to an analysis by Altus Group, property taxes in the United Kingdom were equivalent to 4% of GDP, on par with Israel, and ranked joint-highest in the OECD.
In comparison, the G7 group of advanced economies stood at 2.9 percent. Alex Probyn, president of property tax at Altus Group, stated, “Our clients inform us that the business rates tax is an impediment to investment.”
Chancellor Jeremy Hunt suggests tax cuts are an option when the United Kingdom can afford them. In his autumn statement, he reduced the primary national insurance rate and extended “full expensing,” a tax cut incentivizing businesses to make specific investments indefinitely.
However, according to the OBR, the £10 billion impact of national insurance cuts was more than offset by the £40 billion generated by stealth taxation as more individuals are compelled to pay higher income tax rates.
Ratings firm says UK interest rates should stay higher longer
One thought on “UK tax revenue hits record high; calls for tax cuts”