India comes out merciful on tax misery index

For all the whining over taxes in the country, Indian taxpayers are far better off than their counterparts in countries like France, Belgium and even China when it comes to the total tax levied.

According to business magazine Forbes's Tax Misery and Reform Index for 2007, India is ranked number 13 in terms of the lowest tax misery score, which is a sum of taxes levied at the highest marginal percentage in each jurisdiction.

The top three economies on this count are the tax-free enclaves of the United Arab Emirates, Qatar and Hong Kong, in that order. 

TAXING HIGHS AND LOWS (2007 Forbes Tax Misery & Reform Index)
The 5 economies with the lowest tax misery		The 5 economies with the highest tax misery
United Arab Emirates	18.00	France	166.80
Qatar	35.00	Belgium	156.40
Hong Kong	43.50	China	152.00
Cyprus	73.30	Sweden	150.40
Singapore	79.50	Italy	148.00

India's position is unchanged over 2006 mainly because corporation and personal income tax levels remained unchanged. Neighbouring Pakistan leads Asian economies on tax reforms, trimming a hefty 10 points off its individual income tax.

France leads the list of the economies with the highest tax misery, followed by Belgium and China. The Communist state remains the worst Asian economy on the index. However, it is one of the top reformers this year, knocking eight points off its total score.

The index evaluates whether a jurisdiction's tax policy attracts or repels capital and talent. It also tracks tax reforms. Jurisdictions at the top of the index impose the harshest taxes, while the most tax-friendly are at the bottom. Fifty jurisdictions were surveyed including three new entrants, Vietnam, Bulgaria and Qatar.

Most Asian jurisdictions continue to have a more tax-friendly environment than other parts of the world. Besides Hong Kong, Singapore, Taiwan, Thailand and Malaysia have fared well on the list., besides Hong Kong.

The survey shows that outside of China and Japan, Asia continues to enjoy stable, low-tax advantage.

Singapore, which attracts high-tech companies from Europe and affluent entrepreneurs fleeing misery, however, adjusted tax rates this year and in so doing worsened the overall hit. Other than Singapore, the Philippines is the only Asian country to increase its score, with consumers now paying more value-added tax.

China's improvement is a result of the announced reform to bring the corporate tax rates down to 25 per cent and to apply these rates to all domestic and foreign companies, which may mean a decrease for some and an increase for others on special low-tax or tax holiday dispensations.