It’s the holiday season, many will have recently been or soon be travelling abroad. As well as marvelling at the sights, we will also be struck by how these countries are run, and compare them to life back in home. It is easy to be jealous of:
- State pension levels in Sweden
- Police numbers on Rome’s streets
- Attainment levels of schoolchildren in Japan
- Cuba’s healthcare system
Public sector services and social security systems obviously come at a cost, funded primarily from taxation. So, as we aspire to improve our own, it’s interesting to see just how deep into their pockets our neighbours are prepared to dig, to provide this funding.
2015 national tax to GDP ratio:
- Japan 31%
- UK 32%
- Greece 36%
- Germany 37%
- Sweden 43%
- France 45%
- Denmark 46%
So, the UK public purse is smaller than many of our obvious peers, perhaps as you would expect from the current colour of Government. In the present tide of promises for increased funding for the NHS, social care and public sector pay increases, one could be forgiven for speculating that tax rates will soon rise. The Budget is under four months away and there is already speculation around its content.
Future rate cuts in Corporation Tax could be axed, the new public sector IR35 rules could be extended to private sector contractors, NIC rates linked to NHS funding and a reduction in the VAT registration threshold.
It is an unspoken rule of business that you generate income and value through the business, and then convert this into personal wealth, where you try to both, preserve it and live off it. So perhaps now is a good opportunity to undertake some of this ‘conversion’, whilst the tax costs are relatively modest?