Tax Burden for Britons on the Rise
New research shows that our tax burden is growing - but why might this be?
The tax burden on Britons is growing, with people paying a larger proportion of their income in taxes, new figures show.
A report by the Organisation for Economic Co-operation and Development (OECD) reveals that the UK tax burden rose more sharply than any other leading economy other than the United States in 2005.
According to the OECD's annual Revenues Statistics report, 37.2 per cent of UK economic growth is now taken up by tax, compared with 36 per cent in 2004.
Britain now has a higher tax burden than Germany, Spain and Ireland and the OECD report suggests that the UK must ensure that its tax burden is calculated so that the country remains competitive internationally.
However, with little overall rise in corporate or personal tax rates, the majority of the UK increase appears to be the result of stronger economic growth, corporate profitability and higher personal incomes over the year.
The Confederation of British Industry (CBI) issued a further warning this week about Britain's rising tax burden. CBI director general Richard Lambert said that the tax burden is increasing at an "unsustainable" rate and companies may be forced to leave the country if it continues to rise at the current rate.
Mr Lambert has also declared that the government is failing to get the maximum return from the £150 billion worth of public money it spends on goods and services each year.
Pressure is growing on Chancellor Gordon Brown to provide extra tax relief as Britain's tax burden continues to climb.
The tax burden in several eastern European countries fell in 2005, though the burden in 17 out of 24 countries surveyed rose last year.
The Treasury has stated that government reforms have led to better economic growth and stability, which has in turn had an effect on the country's tax burden.
Britain is experiencing strong economic growth and wage increases are healthy, as the country witnesses some of the highest employment levels on record. Strong levels of national insurance in the UK and VAT contributed to the 2005 tax burden.
The government has increased a number of tax thresholds in recent months in response to economic growth, such as the rate for stamp duty on property purchases and the inheritance tax threshold. National Minimum Wage for British workers aged 22 and over rose on October 1st to £5.35 per hour.
The current personal income tax allowance for most employees is £5,035 a year, with workers taxed 10 per cent for anything they earn up to £2,150, 22 per cent on earnings up to £33,300 and 40 per cent on earnings over £33,300. Further income allowances are provided for married couples, older workers and blind people.
The threshold for Capital Gains Tax is currently set at £8,800, while Corporation Tax on profits between £0 and £300,000 is 19 per cent, 30 per cent less relief on profits of £300,001 - £1,500,000 and just 30 per cent on profits of more than £1,500,000.
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