Tax Avoidance has been highlighted in the national media in recent weeks due to some high profile cases, as well as HMRC’s continued attempts to cut down on the practice. A recent study has found that increasing levels of tax avoidance could be being encouraged by the high rates of tax that the UK are faced with.
Reported by Contract Eye, the study from accountancy firm UHY Hacker Young found that on average the UK collect 34% of GDP in tax. They compared this to the like of the USA (24%), Japan (23%) and Australia (23%) who were all much lower; as well as other EU countries, including Germany (43%), Italy (43%) and France (44%) who were all higher.
The G8 average was 29% of GDP in tax, meaning the UK is 5% higher, with the UK also found to collect one of the highest amounts in indirect tax, at 32%, narrowly behind Russia and Italy (33%). The UHY study suggested that although indirect taxes are easier for the government to collect, they can often have a dampening effect on consumer confidence.
UHY Hacker Young Tax Partner Roy Maugham, commented that whilst the UK compared favourably with some of the major Eurozone economies, it is still fairly high compared to the like of the US, and he suggests that this could lead to lower foreign investment in the future. He said;
“With taxes creeping up over the last few years, we are at a growing risk of losing jobs and investment to overseas competitors. Indeed, the high tax burden in the UK is one of the key drivers of individuals looking to use the aggressive tax avoidance schemes that have been making the headlines recently.”
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