50% Tax Rate 'Damaging The UK', Survey Finds

By ExpatBriefing.com Editorial 07 October, 2011

The UK's top rate of tax is damaging the country, according to a new survey, with financial services practitioners weighing in on the ongoing debate.

According to a survey by the Chartered Institute for Securities & Investment (CISI), two thirds of financial practitioners hold this belief. The levy, charged on all incomes over GBP150,000, is slammed as a disincentive to wealth creation that does little to boost the Treasury’s coffers.

According to one participant, the tax "changes one's focus from maximising earnings to maximising tax efficiency. End result, lower earning, lower taxes, weaker economy”. Whether this is indeed true is likely to emerge when the Treasury produces its review of the tax early next year, on the Chancellor's request.

Another key finding is that respondents demonstrated a widespread concern that the UK faces a drain of talent to countries with a lower tax rate. One said: “Businesses are relocating and offering high-flyers mouth-watering incentives to follow. The Far East region is welcoming such businesses, so their gain is our loss.” The impact this has on growth prospects was also a "red flag" to those surveyed. One contributor argued: “I don't accept that higher earners, who in general use few social services, fund their own pension, often pay for health insurance and are entitled to few benefits should they lose their job, are expected to increase their subsidy of society above the long-established 40% level.”

Turning to those who were in favour of the tax - some 34% of those questioned - CISI says that there was a belief that those who earn more should give more at a time of economic struggle. It was said that, with higher earners easily able to afford the higher tax, this could leave those on lower incomes to pay less. One respondent added, that “it's a reasonable rate but the threshold should be higher and maybe vary according to each region in the UK.”

A comprehensive report in our Intelligence Report series giving detailed information on offshore jurisdictions in tabular form, titled "The Lowtax Offshore Charts: Country Characteristics and Taxation; Residence Guide", is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report4.asp

Tags: Individuals | Expatriates | Tax | Business | Financial Services | Individuals In Business | Entrepreneurs | United Kingdom | Offshore | Professionals | Self-employment | Tax Rates | Individual Income Tax | Services |

 





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