📉 Britain is set to fall further behind Germany in the competitiveness of its tax system as a string of Treasury raids risk making it an increasingly unappealing business destination
UK set to tumble to 30th place in competitive tax rankings once planned rises come into effect, warns Centre for Policy Studies
The Centre for Policy Studies (CPS) said that the UK's outdated business rates system, combined with a planned corporation tax hike and National Insurance raid to fund social care, could derail Boris Johnson’s levelling up ambitions and throw economic growth off course.
The warning comes after official figures revealed that government borrowing was lower than expected in September, giving Rishi Sunak, the Chancellor, more financial room for manoeuvre at the Budget next week.Britain has the 22nd most competitive tax system out of the OECD’s 37 countries, according to the Tax Foundation, a US think tank.
But the UK will tumble to 30th once the planned tax rises come into effect from 2023, the CPS said, placing it further behind Germany, the US and Japan and only just ahead of France and Italy.Daniel Bunn, head of global projects at the Tax Foundation, said: “The UK is at a critical juncture with its tax policy. The levelling up agenda could be curtailed by tax hikes. It will be critical for the Government to focus on reforms that push toward growth and investment.” headtopics.com
Mr Sunak is set to snub pleas from retail and hospitality bosses to announce a business rates overhaul at the upcoming Budget, with plans for only minor changes to be introduced. The CPS said that the Chancellor’s failure to reform business rates means that the UK now has a worse system of recurrent property taxes than any country except for Iceland.
Tom Clougherty, head of tax at the CPS, warned that the Chancellor risks undermining the recovery through tax hikes.He said: “There is nothing wrong with getting the budget balanced, but are we going to do more harm than good with more tax increases?“I hope that is not going to be something which looks in retrospect like a huge error, but it looks like it could be.”
September borrowing £4bn below projections The Treasury borrowed another £21.8bn in September, the second highest September borrowing since records began in 1993, data from the Office for National Statistics (ONS) revealed.However, the figure is £7bn lower than in September 2020 and significantly lower than the £25.9bn forecast by the Office for Budget Responsibility in March. The Government has borrowed £108bn so far this financial year, compared with the OBR’s predictions of more than £150bn.
It gives the Chancellor more room for manoeuvre in the Budget, but is also likely to bring more pressure from businesses and from other ministers asking for extra cash.Borrowing was lower than expected because the economic rebound brought in extra tax revenues. headtopics.com
Higher consumer spending means VAT raised £12.5bn last month, up 4.5pc on September 2020, while fuel duty, aided by panic buying, was up 6pc.At the same time pandemic-era schemes such as furlough were winding down and closed at the end of September. Furlough cost £0.7bn in its final month, compared with £2bn a year earlier.
Separately on Friday, the Confederation of British Industry warned that the Government risked undermining its broader strategy if the Chancellor introduced new business tax rises at next week’s Budget.Tony Danker, director general of the CBI, said: “There is a fundamental inconsistency where the Government wants to unlock business investment, but its tax policies do the opposite. You cannot will the ends and ignore the means to turbocharge the economy. Every economist and business leader knows it.”
A spokesman from the Treasury said: “This Government has consistently backed business. The UK has a highly competitive business tax regime and remains one of the best places in the world to do business - we have a lower headline rate of corporation tax than any other major comparable economy and generous reliefs for both research and development.Read more: The Telegraph »
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Are tax rates similar or lower in Germany? If so, where is our government spending our money because public services in Germany are way better than ours. You're a newspaper so maybe you should be asking this question. Brexit taxes don't come cheap. You reap what you sow.