FTSE100 Tax Burden Grows
Thursday, March 4, 2010
The UK total amount of tax collected by the UK's largest listed
companies on behalf of the country's government has grown significantly
as a proportion of total corporate earnings since 2007, a new survey
The survey, conducted by PricewaterhouseCoopers for The Hundred
Group of FTSE 100 Finance Directors, found that, despite the depressed
economic environment, the total tax rate for FTSE100 firms - the 100 largest firms listed on the London Stock Exchange - increased from
an average of 38.2% of total earnings in 2008 to 41.6% in 2009. This
represents a year-on-year increase of 9% in FTSE 100 companies’ average
total tax rate.
The UK’s largest companies paid or collected GBP66.6bn (USD100bn) in
taxes during the 2008/2009 tax year, the survey found. While
corporation tax payments fell 6.4% to GBP10.3bn over the period, other
taxes did not reduce in line with declining profitability and therefore
account for a higher proportion of overall earnings.
Taxes on employment represent a significant and growing proportion of
the total tax burden: The Hundred Group FTSE 100 companies now pay
employment taxes to the UK Exchequer which equate to an average of
GBP17,721 per employee.
Ashley Almanza, chairman of The Hundred Group of Finance Directors,
said: “FTSE 100 businesses play an integral role in the UK economy,
providing employment to 1.7 million people – many of them in highly
skilled roles – and generating almost 13% of the government’s total tax
While Treasury minister Stephen Timms claimed in a recent speech that
the UK's corporate tax rate, at 28%, is the "most competitive
corporation tax rate of the major economies," the results of the survey
are likely to merely confirm fears in the world of enterprise that the
UK is becoming an increasingly uncompetitive place in which to do
“The Hundred Group survey reveals that total UK tax contributions are
absorbing an increasing proportion of the value generated by FTSE 100
companies," Almanza continued.
"This presents a growing challenge for
the UK’s largest firms. To be competitive, companies need to ensure
that their capital and investment in people, skills and innovation are
targeted at countries whose business environments and tax systems are
internationally competitive,” he concluded.