Britain has tumbled down the global rankings of personal tax competitiveness in the wake of Rachel Reeves’s £25bn raid on employers last year.
The UK has dropped five places to 25th in the rankings of 38 OECD nations in just a year, according to the Centre for Policy Studies (CPS).
The Chancellor’s levy on National Insurance contributions paid by employers, widely considered a jobs tax, combined with the increase in capital gains tax was to blame for the fall, according to the CPS.
Costa Rica, Chile and Portugal are among the nations where individuals face better taxes, the report found.
Daniel Herring, an economist at the CPS, said it is vital the Chancellor does not further undermine growth with more tax raids at next month’s Budget.
“The UK’s continued lack of tax competitiveness would be a concern for any Chancellor ahead of a Budget where tax hikes are widely mooted,” he said.
“Rachel Reeves should resist the urge to crank up pressure on businesses and instead learn from our international competitors. Our current tax system is already uncompetitive and anti-growth – the country cannot afford for things to get worse.”
Britain ranks 28th out of 38 for corporate taxes and second from bottom on property taxes, resulting in an overall position of 32nd.
It raises fears Labour’s taxes will undermine investment, further damaging Britain’s already weak rate of productivity growth.
The Office for Budget Responsibility is widely expected to downgrade its productivity forecasts when it publishes its assessment of the economy’s prospects, leaving a further financial hole in the Chancellor’s plans.
It came as Steve Heapy, the chief executive of Jet2, said he fears tax rises “screwing middle England”.
He warned higher taxes risk driving up the cost of holidays by directly levying charges on travel and because a negative market reaction could weaken the pound in currency markets.
Mr Heapy said: “It’s an inescapable fact that any tax burden will be put on the people in the middle, the squeezed middle, and possibly companies who will pass on cost increases to the squeezed middle.
“The market reaction to the Budget is equally as worrying. If it is seen as not the right Budget, we could get hammered by the financial markets, put borrowing costs up… [and] the currency could reduce.”
Andrew Griffith, the shadow business secretary, urged the Chancellor not to raise taxes further.
He said: “Labour must not come for Brits’ holidays as well as their pensions, homes and savings. People work hard to enjoy a couple of weeks away – all the more so to alleviate the misery of this government.
