Monday 21 May 2012 8:12 pm

UK raised taxes while other EU states cut back

BRITAIN’S income taxes jumped sharply at a time when much of the rest of Europe was reducing the burden on high earners, official statistics showed yesterday. Even in corporation tax, where George Osborne aims to make the UK more competitive, other countries have cut taxes further and faster than Britain, leaving the UK’s rate above the average. From 2000 to 2012 the average top rate of income tax in the EU fell from 44.8 per cent to 38.1 per cent, while the UK’s rose from 40 to 50 per cent. Part of the reason for the drop is the number of low-tax central and eastern European countries that have joined the EU since 2000 – for example the Czech Republic joined in 2004 and has a top rate of 20 per cent. However, that is not the only reason – older members have also cut rates. France’s top rate has dropped from 59 per cent to 46.8 per cent, and Germany’s has been cut from 53.8 per cent to 47.5 per cent. Despite cutting its corporation tax rate from 30 per cent to 24 per cent, and Osborne pledging to keep cutting to make the UK a more attractive place to do business, other countries have pulled ahead. The EU average has fallen from 31.9 per cent to 23.5 per cent, with Germany cutting the most rapidly from 51.6 per cent to 29.8 per cent. The UK joined the EU-wide trend for raising VAT – the average rate has risen from 19.2 to 21 per cent, with the UK’s up from 17.5 to 20 per cent.