Following its 10% rise, the UK now ties with Austria and Belgium in Europe and, globally, Japan as well – placing it in a four-way tie for fourth place on KPMG’s full list, which includes 86 countries.
The rise also was also notable in that it was the biggest tax jump worldwide in 2010 – a year during which many cash-strapped governments turned to tax rises to boost recession-depleted coffers.
Italy, for example, which saw its top tax rate remain unchanged at 43%, saw its position in the EU ranking fall to tie in 12th place, from ninth in 2009, after other nations including Britain increased theirs.
Sweden has the highest top tax rate in both Europe and the world, replacing Denmark, which lowered its tax rate by 6.9% in 2010. The Netherlands has the third highest top tax rate in Europe and the world, as it did last year, unchanged at 52%.
The European average top tax rate this year is 36.7%, up half a percentage point from 2009, while the global average rate is 29.4%, up three-tenths of a percentage point.
KPMG’s global personal income tax rate data is much-used by corporations keen to understand how countries compare tax-wise, and to monitor trends that are likely to affect their businesses.
UK tax ‘kicks in at higher level’
In a statement accompanying the data today, Jayne Vaughan, tax partner in International Executive Services at KPMG, noted that although the UK’s aggressive 10% rise in the top tax rate makes Britain "higher than [our] key competitors, France and Germany", it is "worth noting that the UK top rate of tax kicks in at a much higher earnings level than is the case in most of these countries".
"Whether the tax rate increases we have seen around the world [over the past year] strike the right balance and have the intended impact has yet to be seen," she added.
"Everyone may have a role to play in supporting their national deficit reduction measures but the fact that high income earners are frequently more mobile should not be overlooked."
A copy of the survey is available here.
| Country | 2009 | 2010 | % change | 2010 ranking | 2009 ranking |
| Sweden | 56.7% | 56.6% | -0.1% | 1 | 2 |
| Denmark | 62.3% | 55.4% | -6.9% | 2 | 1 |
| Netherlands | 52 % | 52 % | 0 % | 3 | 3 |
| Austria | 50 % | 50 % | 0 % | 4= | 4= |
| Belgium | 50 % | 50 % | 0 % | 4= | 4= |
| United Kingdom | 40 % | 50 % | 10 % | 4= | 13= |
| Finland | 49.8% | 49.6% | -0.2% | 7 | 6 |
| Ireland | 46 % | 47 % | 1 % | 8 | 7 |
| Portugal | 42 % | 45.9% | 3.9% | 9 | 11 |
| Germany | 45 % | 45 % | 0 % | 10= | 8 |
| EU Average | 36.7% | 37.2% | 0.5% |
Source: KPMG International 2010
