The Burden of Taxation: An International Comparison

It has often been asserted that Britain is one of the most heavily taxed countries in the world. That assertion is examined in this note by comparing the weight of taxation and compulsory social security contributions in Britain with that in other countries. The comparison is made in broad terms with about twenty countries and in more detail with Australia, Western Germany, Ireland, Sweden and the United States. But even the detailed comparison is necessarily a coarse one. Tax systems almost everywhere are immensely complicated and only a few aspects of the systems are examined here.Taxation in this country does not appear to be exceptionally heavy. The total burden—the proportion of the country's income which is taken in tax—is quite near to the European average. Further, the British division of tax between direct taxes on households, taxes on corporations and indirect taxes, is closer to the European average than that of any other European country. Those earning more than about £10,000 a year are more heavily taxed in Britain than in the other countries examined in detail but less than one-tenth of one per cent of the working population are in this income group, so this is hardly a sufficient ground for the general complaint of high taxation. At incomes between £2,000 and £10,000 a year, Sweden takes more in tax than Britain; Australia and Ireland take about the same; and Western Germany and the United States take less. Below £2,000 a year Western Germany and Sweden have very much higher rates than the other countries.