TPA calls on Government to ‘avoid tax hikes’

HM Revenue & Customs (HMRC) needs to avoid any further tax increases that might have an adverse effect on British families and businesses, the TaxPayers’ Alliance (TPA) has warned.

The calls come alongside a damning new report which revealed that the UK’s tax burden recently hit its highest in nearly 50 years.

According to the think tank, the UK’s tax burden – which is calculated as the amount of tax paid by a business, individual or nation in relation to the country’s national income – has soared to £724.9 billion.

The TPA claims that this is representative of approximately 34 per cent of UK Gross Domestic Product (GDP) – and the highest percentage on record since the 1969/70 financial year.

In light of the news, the TPA has said the Government needs to take active steps to avoid any further short-term tax hikes.

In its report, it argues that it is wrong for HMRC to ‘assume’ that the only way to increase its revenues is to increase tax rates.

In fact, the TPA argues that in many cases, the very opposite can actually prove more effective.

For example, ever since headline corporation tax rates were reduced from 28 per cent to 19 per cent in 2010/11, receipts have increased by a quarter (25 per cent), it said.

It adds that smaller businesses and poorer families simply cannot afford a greater tax burden, after its research found that the lowest-earning UK employees pay almost half (49.5 per cent) of their income in tax.

“Families and businesses are being squeezed under the highest tax burden in nearly 50 years,” said TPA Chief Executive John O’Connell.

“The gradual increase of taxation and the introduction of new taxes have hit poorer families the hardest, leaving them with less and less at the end of the month to pay for life’s necessities.”

He added: “Instead of taking even more money away from families and businesses, the Government should consider cutting taxes, or reducing spending in other areas.”

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