High taxes affecting UK competitiveness

High taxes affecting UK competitiveness

	Published : Tue, 18 Oct 2005 16:05 By : Amy Watts Print this Story

Britain's tax system is affecting the country’s reputation as an attractive destination for manufacturing for overseas companies. This is according to the EEF (Engineering Employers' Federation), which represents over 6,000 manufacturing, engineering and technology-based businesses in the UK.

According to the organisation, businesses would pay an additional £2.2bn this year in corporation tax and another £5.5bn in business-related taxes, as per the changes effected to the system since Labour came to power in 1997.

While acknowledging measures such as reducing the headline rate of business tax and introduction of the research and development tax credit, the EEF said that only a few of the 30 advanced nations belonging to the Organisation for Economic Co-operation and Development (OECD) had greater tax burdens. Iceland and South Korea were two such countries, it added. But the US and most of the larger European Union countries including the newly acceded countries of the EU had a tax burden which was reducing.

As Martin Temple, Director General of EEF said in a statement: 'Our long-held competitive advantage on tax is starting to erode. The UK's tax burden has been rising while falling in many other countries, who are actively designing their tax systems to attract high-value manufacturing.'

The recent announcements of a new Business Research Tax Centre located at Oxford University's Said Business School and a Conservative Party Commission have also suggested to the government to look into simpler, fairer and flatter taxes.

Similarly, the Forum of Private Business called on the chancellor to seek out ways to revive the economy by slashing business taxes. It warned of being tempted to raise the taxes to reduce a deficit in the public finances. The employers' body representing small- and medium-sized companies unequivocally stated that the tax burden had become "intolerable" for them.

Last month, as per the World Economic Forum, the UK had come down in a global league table of competitiveness.