Tax burden on working families in UK rising as it falls in Europe

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The Independent Online

The tax burden on working families in the UK has risen over the past four years in contrast to a fall across the rest of Europe, new figures showed yesterday.

An analysis of taxes on the earnings of an average household showed the burden had risen in the UK but fallen across the European Union.

However, the figures showed the tax take in the UK was still much lower than its major economic rivals, such as Germany and France.

The survey of the 30 members of the Organisation of Economics Co-operation and Development (OECD) found that most had cut taxes on pay since 2000.

However, the UK data showed that a married couple with one earner and two children faced tax of 27.1 per cent last year, compared with 24.9 per cent in 2001. This contrasted with a fall for the average of the 15 "old" EU nations from 32.1 to 31.6 per cent over the same period.

The OECD said the rise was driven by the 2002 increase in National Insurance payments to fund extra spending in the NHS and schools.

The figure, which is known as the tax wedge, is based on income tax plus employee and employer contributions less cash benefits as a share of labour costs. The UK figure contrasted with 35.7 per cent in Germany, down from 36.8 per cent, and 8.1 per cent in Ireland, down from 12.1 per cent. The French burden rose to 41.7 per cent from 40.5 per cent.

The Institute of Fiscal Studies said its preferred analysis of tax receipts as a share of national income also showed a rise in the UK over the past five years but a fall across the 12 members of the eurozone.

Stuart Adam, its tax and benefits analyst, said: "It seems to be slightly lower across the EU over the last five years but I am not sure I would read too much into that."

The Treasury said the net tax burden on all families with children in the UK has fallen since 1997 and was "significantly below" those in other large European economies.