High Wage and High Cost Economies
In some countries wages are high, but everything costs more.
In others wages are low, but everything's cheap.
Indirect Taxation is often what makes the difference.
For example, in the UK, 75p of every litre of fuel is paid to the government in tax.
That affects the price of everything.
Making us an "everything costs more" economy and we need higher wages to compensate.
But internationally, that makes us a bad place to situate a company.
High wages means high cost of goods. So the company goes somewhere else.
We compete only against other governments who do the same - cheaper than Germany but way off Indonesia, for example.
And we're offering high corporate taxation against other countries' free factories, incentive schemes and better infrastructure. The net effect is negative.
The Butterfly Wings effect of high corporate taxation in a world economy is massive. The loss of companies like HSBC will not only cost us corporation tax, but rates, employee rents, purchases of goods etc.