THE UK economy is over-taxed, according to new research by UHY Hacker Young, with the tax burden 18 per cent higher than the global average.
In a damning report, released today, the chartered accountant firm said Britain was at risk of inhibiting growth due to its relatively high tax burden which currently stands at a third of UK GDP. This is 18 per cent – or nearly six percentage points – higher than the global average of 27.8 per cent, with the UK comparing unfavourably to similar economies such as the US at 25.4 per cent and Ireland at 28.3 per cent. The UK even lags ageing Japan at 29.5 per cent.
However, it compares favourably with most of western Europe, where the average proportion of the economy claimed by the government is nearly 40 per cent.
The lowest tax burdens can be found in the developing world, with the UAE taking a miniscule 2.7 per cent of GDP in taxes.
The firm warned the higher the tax take the lower the incentive to invest, stunting wealth creation and prompting large firms to seek lower tax bases elsewhere.
The UK is vulnerable to international rivals with stable legal systems and highly skilled workforces, such as Singapore.