U-turns saddle UK with uncompetitive tax system Economists have warned that the U-turn on the Government’s growth plans will leave Britain with one of the least competitive tax systems in the world. The UK is set to fall from 26 to 33 in the rankings, its worst performance since the Tax Foundation think-tank began compiling an index in 2014. Meanwhile, the Centre for Policy Studies (CPS) says the decision to reinstate a corporation tax increase from 19% to 25% removes one of the UK’s biggest incentives as a place to do business. Tom Clougherty of the CPS said that although conditions in financial markets left the Government little choice but to raise taxes, the move would harm the economy's prospects. He said ministers “have been thrown into crisis mode by the reaction of the markets - they had to do whatever it took to stop gilt yields from climbing and climbing. That is what they have done, it is understandable and appropriate.” He went on to suggest that officials should look for future opportunities to cut taxes, simplify the system and reform the over-regulated economy. Tax Foundation analysis shows that Estonia has the most competitive tax system in the Organisation for Economic Co-operation and Development. Latvia is in second place, followed by New Zealand. Among larger economies, Australia is the 11th most competitive, Germany the 15th and the US 22nd. France, Italy and Portugal were the worst performers.