Think Tanks


7 Mar 2011 08:29:37

Britain has most anti-family tax system in Europe

Tim Montgomerie

The Daily Mail quotes research from the Christian charity Care this morning, noting that Britain's tax system is harder on single earner families than any other major developed country.

The numbered list below records the tax burden on a one earner married couple with two children as a percentage of the burden on a single person with no children - both earning £33,745.

  1. UK 73%
  2. Holland 71%
  3. Sweden 71%
  4. Japan 69%
  5. France 62%
  6. Spain 61%
  7. Austria 55%
  8. EU average 53%
  9. Italy 52%
  10. OECD average 52%
  11. Germany 50%
  12. Belgium 49%
  13. Australia 39%
  14. Portugal 39%
  15. Canada 39%
  16. USA 23%
  17. Iceland 13%

The latest Care report does not appear to be online (but previous reports have been posted here) but this is what the authors of the 2009 edition, Don Draper and Leonard Beighton, wrote:

"After taking allowances and benefits into account, the share of income absorbed by taxes has doubled for the average wage-earner with a non-working spouse and children to support. Meanwhile, the tax rate on a single person with the same earnings, but with no family responsibilities, has increased by less than one tenth. The latest OECD figures show that one-earner married couples with children now pay about a third more tax that they would in most other OECD countries. It is difficult to see any argument for penalising this type of family...

Kenneth Clarke, when he was Chancellor of the Exchequer, famously called the married couples tax allowance ʻsomething of an anomalyʼ. Those who question the wisdom or fairness of what has happened are dismissed as reactionaries seeking to turn the clock back to a mythical golden age. To accept their proposals, it is claimed, would put Britain out on a limb and cut off from the common practice of other economically developed countries. Nothing could be further from the truth. As the authors of this paper show, it is modern Britain that is now the exception. The vast majority of developed countries have tax systems that acknowledge family responsibilities towards children and also dependent adults. Many of them also have special tax arrangements for married couples. In some cases, these arrangements are also available for same-sex or mixed-sex couples living in registered partnerships."