Why not add more? New taxes seem to be a good way to make up for our Tax Gap.
This is an astonishing amount of extra tax money coming into the Treasury in just a decade. All from shiny new taxes that did not previously exist. Surely more money into HMRC, means more money for the essential public services and infrastructure that we all benefit from.
So, it’s a win-win?
Nothing is that simple, is it? Especially when we’re talking about tax. Yes, it’s more money into the collective public purse, but someone has to pay these new taxes. And it’s Britain’s business community that is bearing the brunt of these new taxes.
As reported by Accountancy Age, UHY Hacker Young partner, Clive Gawthorpe, said: “Adding new taxes and placing a heavier burden on businesses does not seem to fit in with the Government’s aims to simplify tax. These new taxes have already brought in billions of pounds in a relatively short space of time. If we want tax simplification shouldn’t we be reducing the number of taxes? Each new tax adds more and more of a burden on businesses. Given the economic uncertainty perhaps the Government should be holding off on plans for new taxes.”
New taxes statistics
The three new taxes with the highest revenue are:
- Bank Levy: Introduced 2011, made £20.4bn since it started. This means that UK banks pay more than the normal Corporation Tax rate.
- Bank Surcharge: introduced 2016, made £5.3bn. It is an extra 8% tax on UK banks’ profits.
- Apprenticeship Levy: Made £5.5bn since its introduction in 2017. The aim is to make sure that businesses fully fund their apprenticeship schemes.
The eight new business levies and taxes raised a total of £7.6bn in the 2018-19 tax year alone. This is up from £7.4bn in the previous tax year.
Will there be more new taxes in the future?
There is certainly pressure on the government to add more new taxes to tackle a variety of problems. These include proposals on:
- Emissions: in order to meet their net zero by 2020 target
- Vaping products
- Trans-fats: the World Health Organisation (WHO) is suggesting that companies that make foods that are high in trans fats should pay a specific tax to offset the health consequences.
- Foods with high fat, salt and sugar: Obesity is now proven to significantly increase the likelihood of developing four major cancers. Making it a higher causal factor than smoking and we have a rising proportion of the population in this category. Cancer Research and other leading health organisations would support a move to expand the existing sugar tax on high sugar drinks.
As ever, this is a tricky balancing act for the decision makers. Health costs and climate change concerns versus business and wider economic growth. New taxes may raise cash in the short term, but they alone cannot solve these major issues, and costs money to set up.