BusinessCompany NewsDramatic drop in UK tax burden

Dramatic drop in UK tax burden

Britain's tax burden as a proportion of GDP fell sharply in 2002 to 35.8% from 37.3% in 2001, confirming the UK as among the lightest-taxed jurisdictions in the European Union.

Link: Eurostat moves to avoid more scandal

The contrast is especially marked with its key competitors Germany (40.2% in 2002), France (44.2%), and Italy (41.7%), according to the latest available comparative figures from EU statistical agency Eurostat.

Of the EU’s richer nations, only Ireland (28.6%) has lower tax/GDP rates than Britain. In the old 15 member EU, Spain (36.2%), Greece (36.2%) and Portugal (36.3%) are broadly similar, but it is amongst the union’s new eastern and southern member countries where Britain will face real low tax competition.

The Czech Republic (35.4%), Cyprus (32.5%), Latvia (31.3%), Lithuania (28.8%), Malta (31.3%) and Slovakia (33%) all sported lower tax rates in 2002.

Across the (expanded) EU, the overall tax burden has been stable since 1995, when it was 40.5%, compared with 40.4% in 2002. It has fallen since 1999, however, from 41.8%.

Said Eurostat: ‘These reductions in the majority of member states have been partly due to reforms in tax systems, particularly through cuts in personal income tax rates and in social contributions.’

It also noted wide variations in Europe?s ‘single market’, with Sweden recording the highest tax/GDP ratio (50.6% in 2002), then Denmark (48.9%) and Belgium (46.6%).

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