This chart was included in a Martin Wolf article in the FT yesterday, but is worth noting in its own right:
The pretence that the UK is over-taxed is just that: it is a pretence not supported by the evidence.
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Also interesting that 13 of the 16 countries listed have INCREASED taxes since 2006 with only (relatively) highly taxed Sweden and Denmark making overall reductions, along with outlier Australia.
Also, where does healthcare fit in?
Eg. In the UK, once we have paid our 40% tax we pay no more for healthcare. In the US you may pay less tax but you will still need to pay for health insurance. Other countries have government run/mandated health insurance schemes – are premiums counted as “tax”?
We need to compare countries taking in to account health taxes/insurance etc. Do these data do this?
A totally fair point
But, we still under pay
Yes we do under pay.
My point is that if you add in required health insurance premiums then the UK will look like a very low tax country – it might add 10% to the US number. Not sure about others.
The US would be the biggest change
I see Belgium is relatively highly taxed. Hmm, I booked an appointment with my (Belgian) doctor – he will see me on Wednesday. I also booked an appointment @ the local – extremely well equipped local clinic (it x-rayed my back after a bicycle crash) – sure these things cost money which I reclaim from my mutuel – insurance which everybody has. Friend did his ankle in on Friday – went to hospital – lots of x-rays etc – all sorted out in 4 hours (he is in plaster – fractured ankle). It all comes down to funding. Note, none of this is private medicine, just a slightly diff take on public.
A point often missed, that much of European medicine relies on mutuals rather than ‘for profits’.
I think this means that for the UK government spending amounts to about a third of the total size of the economy?
However, increasing tax does not necessarily mean that government spending as a proportion of GDP will increase proportionately?
Increasing tax will also grow the size of the economy so that addition tax will be a smaller proportion of GDP overall. How much government spending increases GDP depends on the “fiscal multiplier”. My recollection is that, after the crash in 2009, the fiscal multiplier was woefully underestimated to be less than one. This led to the false belief that austerity would improve the fiscal position. In fact, if memory serves correctly, even the IMF later corrected their estimate to be between 1.5 and 2 during recession. Given that the BoE is busy pushing the UK into recession there is ample scope for further government spending that would grow the economy.
All of which points to the fact that there is even more room for increased taxation without unduly increasing tax as a proportion of GDP. In that respect Rachel Reeves is correct, we do need to grow the economy. But to do this we need more government expenditure.
?
You highliught an appropriate point – always ignored
The IFS is projecting that the UK government will already take around 41% of GDP in revenue this year and slightly higher in future years, so the UK is already moving up this league table and Martin Wolf’s FT figures are out-of-date. See https://ifs.org.uk/taxlab/taxlab-key-questions/how-have-government-revenues-changed-over-time
The OECD has produced an interesting comparison of UK government revenues and their composition into main components. This shows that the UK’s social security contributions are much lower than in most other countries, so this is probably something that will have to increase if the UK is to have comparable levels of social security services. See https://www.oecd.org/tax/revenue-statistics-united-kingdom.pdf
Whether we are taxed high or low, what is important is whether we get value for money, we being the public, not the bankers and CEOs of private companies.
I would argue that low taxation is not providing value for money: a broken NHS, broken schools, sewage dumped in our rivers, expensive education with a life-long debt, expensive energy, expensive food, etc.
This does assume that taxes pay for government spending, which MMT suggests it does not, although taxes do contribute to a fairer redistribution of wealth which may contribute to our well-being.
Please forgive me if everyone knows this, but what its the right amount of taxation – for a fair and sustainable world?
There isn’t one.
It is a meaningless question