UK tax rates – how do they compare with other countries?

The latest comparative study of the tax systems in the OECD countries provides interesting comparatives for the UK in the run up to the Budget in November.

The study covers the 36 members of the OECD as well as Argentina, Indonesia and South Africa.

South Africa is one of the key partners of the OECD of which the other key, non OECD, partners are Brazil, India, Indonesia and China.

The full text of the OECD report can be read, or bought, here but readers may find it interesting, and informative, to look at the tables which have been published as part of a power point presentation

The UK has the lowest corporate income tax rate with the exception of two outliers: Ireland and Hungary which are quite a few percentage points below every other country.

The OECD Press Release reflects on recent changes in corporate income tax rates as follows:

“Among the countries that introduced significant corporate tax reforms were a number with high corporate tax rates, where tax reform was long overdue, said Pascal Saint-Amans, director of the OECD Centre for Tax Policy and Administration. While these corporate tax cuts have created some concerns of a ‘race to the bottom,’ most of these countries appear to be engaged in a ‘race to the average,’ with their recent corporate tax rate cuts now placing them in the middle of the pack. We will be closely watching how other countries respond to this trend in the future.”

The final table shows the relatively limited role of property taxes in all the OECD countries but it does also show that the UK has the highest property taxes as a percentage of GDP.

This echoes the message in the Tax Faculty 2009 Wyman debate and the point made during that debate by Stephen Bill who was at the time Chef de Cabinet for European Commissioner László Kovács.

The policy recommendations at the end of the presentation are:

  • Avoid excessively pro-cyclical tax policy in a context of economic recovery
  • Critical need to continue cooperating to avoid harmful tax competition
  • Continued focus on inclusiveness
  • Significant progress needed on environmentally-related taxation

We will be able to gauge the extent to which the UK is listening to the OECD message when we hear the Chancellor’s Budget statement expected in November.