Taxes highest for 20 years - and this is being felt across the country

October 18, 2007 1:38 PM

The OECD has just released an update on its historical tax burden series. It shows that taxes in Britain are at the highest level for 20 years.


This is very worrying. While other countries are stabilising or reducing their taxes, Britain’s tax burden continues to rocket. A decade ago this country had among the lowest taxes in the OECD, now we have some of the highest. Faced with the growing challenge of China and India, this is completely the wrong direction to go. Britain’s economy cannot compete with India and China on wages and nor should it, but we can stay competitive if we have a low, simple and transparent tax system. The current tax regime has none of these features.


Importantly, this is being felt across the country. Jeff Randall's excellent "Real Business in Brown's Britain" series in the Telegraph, in which he has journeyed across the country to discover the challenges facing small businesses, is scathing:

"The proportion of start-ups that had achieved an annual turnover of £1m-plus after five years fell sharply during Brown's years at the Treasury, down from 29pc in 1998 to 16pc in 2006.


"And even though the UK's stock of companies has been rising, the rate of entrepreneurial activity has been falling: the proportion of adults who are either setting up a business or running one is down from 7.7pc in 2001 to 5.8pc in 2006.


"Research by the University of Sheffield suggests that behind this decline lies "crowding out" by a bloated public sector, which has created about 680,000 state-funded jobs since Labour came to power in 1997.


"For many small companies battling to survive in Britain's fast-shrinking manufacturing sector, this country is no longer a rewarding place to be, as I discovered on the next leg of my journey.


...


"Looking round the world at rival locations, Duncan concludes: "This [Newport] is by far the most expensive place to operate." He includes in that tax, wages and the cost of logistics, such as transport. As a result, Tomoe may be forced to say "hwyl fawr" to Wales.


""It's possible that one day we won't manufacture here," says Duncan. He would regret leaving, but he's paid to run a profitable business for Japanese shareholders with an international perspective. "We are seriously considering moving overseas because Britain has become so uncompetitive." "

The OECD has just released an update on its historical tax burden series. It shows that taxes in Britain are at the highest level for 20 years.


This is very worrying. While other countries are stabilising or reducing their taxes, Britain’s tax burden continues to rocket. A decade ago this country had among the lowest taxes in the OECD, now we have some of the highest. Faced with the growing challenge of China and India, this is completely the wrong direction to go. Britain’s economy cannot compete with India and China on wages and nor should it, but we can stay competitive if we have a low, simple and transparent tax system. The current tax regime has none of these features.


Importantly, this is being felt across the country. Jeff Randall's excellent "Real Business in Brown's Britain" series in the Telegraph, in which he has journeyed across the country to discover the challenges facing small businesses, is scathing:

"The proportion of start-ups that had achieved an annual turnover of £1m-plus after five years fell sharply during Brown's years at the Treasury, down from 29pc in 1998 to 16pc in 2006.


"And even though the UK's stock of companies has been rising, the rate of entrepreneurial activity has been falling: the proportion of adults who are either setting up a business or running one is down from 7.7pc in 2001 to 5.8pc in 2006.


"Research by the University of Sheffield suggests that behind this decline lies "crowding out" by a bloated public sector, which has created about 680,000 state-funded jobs since Labour came to power in 1997.


"For many small companies battling to survive in Britain's fast-shrinking manufacturing sector, this country is no longer a rewarding place to be, as I discovered on the next leg of my journey.


...


"Looking round the world at rival locations, Duncan concludes: "This [Newport] is by far the most expensive place to operate." He includes in that tax, wages and the cost of logistics, such as transport. As a result, Tomoe may be forced to say "hwyl fawr" to Wales.


""It's possible that one day we won't manufacture here," says Duncan. He would regret leaving, but he's paid to run a profitable business for Japanese shareholders with an international perspective. "We are seriously considering moving overseas because Britain has become so uncompetitive." "

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