Fiscal Ferocity

The Chancellor has quelled rumours of the UK becoming a low tax haven following Brexit: ‘The amount of tax we raise as a percentage of our GDP puts us right in the middle of the pack. We don’t want that to change even after we leave the EU’. But never say never, right? In truth the UK (at c.35% of GDP) is already at the low end of taxation for Europe (typically 40%+), but still ahead of Ireland (c.30%) and the US (c.25%), and significantly ahead of the Middle East (typically <5%). Low corporation tax rates often come under criticism from those promoting greater public spending. However, corporate taxes account for only 6% of all UK government revenue; the lion’s share of which comes from income tax (25%), NI (18%) and VAT (17%). SDLT is just 2%. Attracting international business after we leave the EU is likely to require greater resourcefulness.  Inevitably there will be choices to make as to whether we want to tax these businesses directly, or tax the jobs that they create.