Tax rates erupt in EU
Published at 14:15, Friday, 15 October 2010
The UK has the fourth highest rate of income tax in the EU following the creation of the new 50 per cent band.
Higher rate taxpayers in the UK also suffered from the biggest income tax hike in the world this year, when the top rate paid by people earning £150,000 was raised from 40 per cent to 50 per cent, according to accountancy firm KPMG.
Only Sweden, Denmark and the Netherlands now have a higher top rate of income tax than the UK, with Sweden topping the poll with a rate of 56.6 per cent, followed by 55.4 per cent in Denmark and 52 per cent in the Netherlands.
Austria and Belgium came in equal fourth place with the UK, both also charging a highest rate of 50 per cent.
The UK’s position represents a considerable increase on 2009, when it had only the 13th highest top rate of income tax in the EU.
At the other end of the scale, Bulgaria has the lowest rate at just 10 per cent, followed by Lithuania and the Czech Republic at 15 per cent.
The average top rate of income tax across the whole of the EU is 37.2 per cent, up from 36.7 per cent in 2009.
KPMG said that although income tax had remained static in many locations across the world in the past year, the general upward trend suggested governments were beginning to opt for tax hikes in order to combat deficits.
Iceland has replaced its flat tax regime with a progressive one, raising the top rate by nine per cent, while Greece has hiked its highest rate by five per cent, Portugal has imposed a three per cent hike and France has raised its top rate by one per cent.
But income tax rates in Denmark moved in the opposite direction, with the country’s government reducing its top rate by nearly seven per cent as part of a stimulus package to increase consumer spending. Croatia also dropped its top rate by five per cent.
Jayne Vaughan, tax partner in international executive services at KPMG in the UK, said: “With our current top rate of 50 per cent, only Sweden, the Netherlands and Denmark outstrip the UK in terms of personal income tax rates and we are higher than key competitors France and Germany. Although it is worth noting that the UK top rate of tax kicks in at a much higher earnings level than is the case in most of these countries.”
Published by http://www.cumberlandnews.co.uk