The United Kingdom consistently ranks towards the top of league tables in terms of ease of doing business. Many prime ministers and chancellors have recognised the importance of low taxes and light regulation in order to make the UK a competitive and attractive place to do business.
In many ways, the UK is a favourable location in which to start and run a business. For example, the UK has a world class legal system with a strong respect for the rule of law, it is between the American and Asian time zones, and it is politically and environmentally stable. It has relatively good infrastructure and an educated workforce. And, of course, English is the official language.
But the government imposes numerous taxes and regulations on businesses, which place a burden on companies who have to spend time, money, and resources on paying taxes and complying with the relevant legislation.
Taxes and regulations increase costs for businesses, but these costs are ultimately paid by people. As the Nobel Laureate in economics Milton Friedman explained: “the elementary fact is that business does not and cannot pay taxes. Only people can pay taxes. Corporate officials may sign the check, but the money... comes from the corporation’s employees, customers or stockholders”.
In this paper, various taxes and regulations levied upon businesses in the UK will be examined to see how this increases the cost of doing business. Specifically, how these taxes and regulations impact workers, consumers and the wider economy. The paper also contains policy recommendations which the government should implement in order to alleviate the burden on businesses. The taxes and regulations discussed here should not be regarded as an exhaustive list. With the tax burden at a 49-year-high and successive governments imposing new regulations each year, there are dozens of taxes and regulations which could be discussed.
To that end, the focus will be on 14 of the most damaging.