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Why is Britain so expensive a place to live in?

tax-burdenAllister Heath, editor of City AM, answers the question.  It’s because UK taxation is too high.  Quite apart from income tax, VAT, and the other direct taxes, the indirect and stealth taxes are making us pay far too much for everything, and all to support a bloated government.

Allister Heath reminds us that petrol (aka gasoline) is subject to a 58.8% tax, not even counting the corporation tax and the North Sea Oil Levy imposed upon it.

Air passenger duty is the world’s highest, adding £94 to long hail flights and £13 for flights within Europe. And Insurance Premium Tax bumps up the cost of travel insurance on top.

Oil and gas policy and regulation added 7% to prices in 2007, but this rises to 22% by 2020

The EU’s Common Agricultural Policy is a covert subsidy we are forced to pay to European farmers.

Tax on wine is 57% of the cost of an average £5 bottle, 31% of a pint of beer, and 79% of the cost of a bottle of vodka.

The Community Infrastructure Levy routinely adds £200 per square metre to building costs, sometimes up to £575.

Planning restrictions are so tight that a hectare of agricultural land that sells for £20,000 in Oxford, becomes worth £4,000,000 if it has residential planning permission.  This restriction makes it very costly to build and raises the prices of everything produced or sold.

It all makes the UK expensive and uncompetitive.  Politicians siphon off the wealth that Britons create in order to buy votes with it.  Allister Heath’s solution?  Cut unnecessary spending and slash taxes.  It sounds easy, but we have yet to see a party bold enough to advocate it and to implement it.

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4 Responses

  1. Taxes are too high, absolutely. But part of the reason for our pain is the chronically low level of productivity compared with the United States. I blogged on this two years ago, at the time of the last self-imposed debt ceiling crisis: “In Defence of the Republicans. Well, up to a Point.” http://www.didcotman.com/in-defence-of-the-republicans-well-up-to-a-point/

    The US government spends in round figures ten percent less than the UK government per head of population, yet Tax Freedom Day is weeks earlier than for the UK. Productivity is the cause for the difference, not the level of tax and spending which is broadly equal. We need to especially look at cutting those taxes that impact productivity and the cost of doing business.

    • And yet, we often hear how productivity in France is higher than the UK, yet tax freedom day in France is two to three weeks later.

      If France truly has high productivity, then the Moon truly is made of green cheese.

      I think productivity and GDP figures should be taken with a bucket of salt.

      And speaking of France, if anyone thinks cost of living in the UK is high, spend a while living in, rather than just holidaying in there.

  2. The bottom line is…….the more Tax any Government rakes in the more is has to waste on often useless pursuits, wars included.

    • Dear Mr Truman

      I suspect that the reason government insists on raising taxes to or even above the optimum on the Laffer curve is to stop discretionary expenditure infringing on the government’s ‘patch’, particularly education, health and welfare – the latter expanded by keeping a large pool of people unemployed.

      Having mopped up the surplus from the taxpayers’ pockets it then has the problem of disposing of the excess which is why we have so many blatently wasteful projects, from failed IT to ‘eco’ subsidies. Entire industries have evolved to help government spend tax pounds – military, ‘green’, drugs and regulation.

      DP

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