Brits pay even more income tax than ‘French, Germans and Americans’

Britons are paying even more taxes on their income and capital gains than the French or Germans – with the burden climbing to the highest in nearly half a century.

Figures from the Organisation for Economic Cooperation and Development (OECD) showed it reached 10.8 per cent of national income last year, the biggest since 1978.

That is even before Rachel Reeves’s latest stealth tax raid which will drag even more households into paying taxes at higher rates.

It is the third-highest burden for income taxes and capital gains for any member of the G7 group of advanced economies, behind only Canada and Italy.

And it compares with 9.3 per cent in France – usually thought of as having a much more punishing tax regime. In fact it has been higher in the UK than France for every year since 2021.

In Germany, the figure for last year stood at 10.1 per cent and at 10.3 per cent in the United States.

The overall tax burden – including business and other taxes – on this side of the Channel at 34.4 per cent, remains lower than in France at 43.5 per cent.

Britain’s spiralling income tax burden has coincided with the deepening impact of stealth taxes on hard-working households.

The government has been using these to squeeze more out of households since 2021, when income tax thresholds were frozen.

Ms Reeves extended the freeze in her Budget last month for a further three years than previously planned to the 2030-2031 financial year – a move that will mean taxpayers paying £13billion more a year.

Ultimately Britain’s income tax bill will be £67billion a year higher thanks to the overall impact of the stealth taxes since the freeze began.

Ms Reeves also used the Budget to raid ‘salary sacrifice’ pension schemes and put up taxes on dividends, property and savings.

The overall UK tax burden is expected to rise to 38 per cent of gross domestic product (GDP) by 2030-2031, an all-time high, according to forecasts published alongside the Budget.

But despite raking in more money from taxpayers, debt is on course to end the decade at 96 per cent of GDP, twice as high as the average advanced economy.

The Office for Budget Responsibility (OBR) has warned that higher taxes risk damaging growth.

David Miles, the OBR’s top economist, said last week: ‘It’s very difficult to raise substantial amounts of taxes without having negative effects on the incentives of people either to work, to save, to stay in the country, to set up businesses.

‘We think on balance there’s a negative effect from the decision to extend the threshold freeze.’

The OECD report came as an airline industry chief warned Britain has become ‘hooked’ on high taxes.

Willie Walsh, the former boss of British Airways who is now director general of the International Air Transport Association (IATA), highlighted hikes in air passenger duty (APD), which typically leads to higher ticket prices.

And he said claims that such taxes were required on environmental grounds was a ‘con job’.

Mr Walsh said: ‘The UK has got hooked on APD, it’s like a drug for them. It’s not an environmental tax. It’s just a tax to raise revenues because the UK economy is sluggish and they need to raise tax revenues everywhere.

‘If the Chancellor of the Exchequer had genuinely driven an economy that was growing, I think you might have seen a more responsible attitude towards some of these taxes that could have helped fuel growth.’

He added: ‘Taxation doesn’t reduce CO2, it reduces the number of people who are able to fly. The flights still operate, just with fewer people, so there is zero environmental benefit.’