T he annual report into comparative global income tax rates, the Individual Income Tax and Social Security Rate Survey, always makes interesting reading.

It will come as no surprise to readers to learn UK taxpayers are just about taxed to the hilt.

We are the fifth-highest taxed nation on earth and it often feels like it too. In fact, it is a shock to discover that four other countries (Sweden, Denmark, Netherlands and Spain) impose higher top rates of income tax than the UK, although perhaps more predictably, the majority of income tax rate movement over the past 12 months has taken place in Europe.

Not all European countries have had to hit their citizens even harder in the pocket though.

The average income tax rate in eastern Europe, for example, is just 17 per cent, “a result of the historically low flat-rate tax initiatives,” according to accountants KPMG, publishers of the report.

The firm reports that Hungary has recently slashed its top rate from 32 per cent to 16 per cent and adapted a flat rate tax system. Perhaps the UK Chancellor should consider something similar.

In troubled southern Europe, the highest average marginal income tax rates are less than 39 per cent, while in northern Europe they are 40 per cent, but more than 45 per cent right here on the continent’s western flank.

The pips are not quite squeaking, but they’re beginning to make a loud whining noise and there’s little sign that matters are about to improve. Indeed, although the UK’s highest rate of tax is scheduled to fall next April, proposals forming part of what is known as the Government’s General Anti Abuse Rule (GAAR) could soon make legitimate tax avoidance strategies illegal.

There was a time when the rules were absolutely clear — tax avoidance was perfectly legal, while tax evasion was illegal.

Theoretically, this is still the case, although some commentators increasingly refer to tax avoidance in the pejorative sense as if it has become a crime.

It has not, but those who construct and then participate in contrived, complex tax avoidance schemes only succeed in blurring the line between legal and illegal and making life difficult for the overwhelming majority.

The Government is keen to crack down on these greyish-looking tax avoidance strategies, not because they believe they can recoup money they calculate they are missing, nor even to prevent new schemes being introduced at some point in the future.

Instead, the desire to score some easy political points is driving this GAAR proposal. Any senior politician standing up and declaring their party has closed a series of tax loopholes is guaranteed positive pre-election coverage By HMRCs own admission, tax avoidance costs the Treasury £1.5bn a year and a further £1bn in corporation tax. Contrastingly, VAT fraud costs the country £9.4bn, while a further £10.9bn is lost as a result of inaccurately-completed self-assessment details.

Nonetheless, people undertaking fairly standard measures when arranging their finances in a legitimate attempt to avoid paying too much tax could unwittingly fall foul of the GAAR proposals and find themselves being investigated by HMRC and ultimately liable for deferred tax charges.

Few of us are immune from moaning about the tax system, yet if everyone is paying a fair whack, then we tend to accept it, warts and all.

The fear is that in a desperate attempt to accumulate much-needed political capital from clamping down on contrived tax avoidance, the Government will rush through hastily-prepared, ill-considered legislation which penalises legitimate tax payers who have no pathological desire to avoid paying.

So the message to investors and savers is clear — take full advantage of ‘standard’ tax avoidance products such as ISAs and pensions while you still have the opportunity to do so.