Eurostat has produced an interesting document comparing the tax policies of the various EU countries. It begins with the stark conclusion:
” The European Union is, taken as a whole, a high tax area”
It points out that in Japan and the USA taxes are 40% lower as a proportion of GDP. Tax levels in the rest of the advanced world and in the developing world are usually lower than the EU by a considerable margin.
The UK is in the middle of the EU pack for overall taxation, at 38% of GDP. Where the UK is at the dear end within the overall high tax area is the taxation of income and capital.
The UK is the second highest when it comes to the share of income taxes in the total tax take. The UK gets 44% of all its revenue by taxing earnings and enterprise, where France gets just 26%and Germany 29%. There are only five countries with a higher top rate of Income Tax than the UK’s. The UK also has the third highest implicit tax rate on capital, at 37%.
So all those why say the UK is too Anglo Saxon, and would do better if it had tax rates of a more egalitarian kind as on the continent, should rejoice. The UK is already leading the pack of high tax EU countries when it comes to the proportion of tax revenue that comes from taxing income and capital, and is near the top when it comes to tax rates on the rich and successful.
The problem for the EU as a whole is the high cost large government model is not delivering the same faster growth and rising living standards that lower tax and smaller government models are delivering elsewhere.