Labour tax raids could make Britain one of ‘least competitive and most anti-growth’ developed countries, report warns_Nhy
Labour‘s budget tax hikes will make Britain ‘one of the least competitive and most anti-growth’ developed countries, according to fresh analysis.
The country is already lagging near the bottom of the table of 38 advanced economies for competitiveness.
But it will tumble from 30th to 35th if a series of predicted tax rises by Chancellor Rachel Reeves come to fruition, the Centre for Policy Studies said.
Modelling carried out with the Tax Foundation looked at the attractiveness of the 38 nations in the Organisation for Economic Cooperation and Development (OECD).
Th UK is already deemed be a less attractive place to investors than countries including Hungary and Germany.
But it would become even worse if Ms Reeves’ continues with predicted increases to capital gains tax, the introduction of a wealth tax and hiking dividend taxes.
Should Reeves introduce all three, the UK could plunge even further down the competitiveness ranking to 35th if all three were introduced, the the International Tax Competitiveness Index report said.
This would leave only France, Italy and Colombia with less competitive tax systems than the UK.
Businesses have already sounded the alarm over a double whammy of tax increases and new workers’ rights, warning it threatens jobs and economic growth.
The policies fly in the face of Ms Reeves’ claim she will be the most ‘pro-growth’ Chancellor in history.
Daniel Herring, researcher for economic and fiscal policy at the Centre for Policy Studies (CPS), said: ‘There’s a real danger that Britain could end up with one of the least competitive and most anti-growth tax systems in the OECD if the expected tax rises come to fruition in the budget.
‘If Labour really wants long-term economic growth, it needs to get serious about fundamental tax reform.’
The CPS also questioned the Chancellor’s reported plan to increase the capital gains tax on share sales by several percentage points from the current rate of 20pc.
CGT is levied on profits made when selling assets, with different rates applying depending on what type of asset it is.
But the CPS say raising this threshold will ‘do little’ to help Reeves plug a £22bn hole she claims she discovered in public finances.
‘At worst, it will lose the Treasury money while harming economic growth and damaging the UK’s reputation,’ the report adds.
A wealth tax would run the risk of leading to high-flyers leaving the country, and would be a ‘bad idea’ as it is ‘unlikely to raise significant revenue, the report adds.
Last week businesses warned an expected hike to national insurance contributions (NICs) for employers amounted to a ‘tax on jobs’ and could even become ‘Labour’s poll tax’.
Labour has pledged not to increase NI but has claimed its manifesto did not rule out hiking contributions made by employers.
Health Secretary Wes Streeting repeated the claim yesterday as he refused to deny a rise.
A report by the Centre for Policy Studies said that a wealth tax would run the risk of leading to high-flyers leaving the country, and would be a ‘bad idea’ as it is ‘unlikely to raise significant revenue
Health Secretary Wes Streeting repeated the claim that Labour’s manifesto did not rule out hiking NI contributions made by employers
The Tories have accused Labour of breaking a manifesto commitment after it said: ‘Labour will not increase taxes on working people, which is why we will not increase National Insurance, the basic, higher, or additional rates of Income Tax, or VAT.’
But Mr Streeting claimed on Sky News that Laura Trott, shadow chief secretary to the Treasury, had accused Labour of not ruling it out during the election.
She responded yesterday, saying: ‘During the election, I held a press conference where I outlined to the nation the glaring and the obvious gaps in Labour’s funding plans, and listed taxes they might raise to pay for their policies.
‘And what did Labour say? They said these were measures that “Labour isn’t doing”.
‘Labour have been planning tax rises all along. They misled the public during the election campaign and they know it.’
Ms Reeves is said to believe that the public will accept a multi-billion hike in business taxes if it is linked to repairing the NHS’s finances, according to the Observer.
Experts also assessed the pros and cons of raising the rate of dividend tax – a levy paid by company shareholders on their pay-outs.
