Adam Smith Institute Warns Gordon Brown Over Tax Hikes

by Jason Gorringe, Tax-News.com, London

08 October 2002

A report released by the Adam Smith Institute on Monday has warned that it would be 'suicidal' of Chancellor Gordon Brown to increase taxes still further, given that they have increased more steeply in the United Kingdom of recent years than in any other European country.

The ASI report, authored by Lombard Street Research senior international economist, Gabriel Stein revealed that over the past five years, the proportion of national income spent on taxes in the UK has risen from 36.7% to 38.3%. In 13 of the 15 EU member states, by comparison, the chunk of national income claimed by the taxman has decreased.

The report went on to observe that even traditionally high taxing countries, such as Germany, Finland, and Sweden have decreased the size of their tax burden since 1997, although it did point out that the amount of national income taken by such countries is generally greater to start with.

Mr Stein also warned that tax levels are set to rise again as a result of the Chancellor's ambitious health and education spending plans:

'Unless the government goes into deficit, this will all have to be paid for by higher taxes,' he explained, continuing: 'Recent global economic weakness has already moved the government to hint that taxes may have to rise by even more in order to make up for the shortfall in growth. It is remarkable to increase taxes when growth lags - some call it suicidal.'

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