Corporation tax receipts this July were £7.1 billion , a decline of £1.7 billion from July last year. That's a decline of 19.3%.
It is claimed a one off repayment of £0.7 billion affected this sum in the Treasury report on the issue: the payment was to a Bank of England subsidiary. That seems an unlikely explanation for such a big variation in the data. In any event, I'm sure it's not being taken out of account when it was paid, which appears to have been January.
So the question arises, why has the fall been so big?
There are a number of good reasons. First there are falling rates. This is the HMRC data on rates:
Large companies are now paying on account for 2012. A 7.7% decline could simply be attributable to the tax rate if all were at the large company rate. Not all of it is at that rate, but even so, this loss can simply in part be due to a deliberate government give away at a time when it could not be afforded.
Compared to two years ago the rate could explain a decline of revenues of coming on for up to 16%.
Second, and I admit this is speculative, some companies may now be anticipating the impact of new controlled foreign company rules in their payments on account. The Treasury said in Budget 2011 that these would cost £210 million in lost revenue this year and I have always thought this a massive underestimate. This encouragement for companies to abuse tax havens to hide their proofits may already be costing us dear.
And then thirdly of course there is the fact that HMRC simply does not collect tax from many small companies, even when they owe it. As my research has shown, in 2009/10 just one in three companies managed to submit a tax return and over a third of all tax returns HMRC requested were never delivered. Tax evasion is rife in this sector, and the declining staff numbers at HMRC are bound the making this worse.
So, why are the numbers getting worse? There is one simply explanation: policy decisions are making them worse for all these reasons.
And they're going to get much worse still next year as more tax cuts and the full controlled foreign company rules come into force. And what's the impact of that going to be? No doubt more cuts in benefits, more sports fields sold and more people made unemployed. All so that large companies can get richer.
That's the bankruptcy of this governments economic policy for you.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Maybe I’m being a bit thick, but what subsidiaries would the Bank of England have that would have a tax refund?
To do with surpluses on QE!
Isn’t George Osborne emulating the Republican strategy of ‘Two Santa Clauses’ Theory?
Increasing borrowing and the deficit justifies more cuts ie Stockman’s ‘starving the beast’ of government. Massive tax cuts for large corporations and the super-rich justified on the basis of the Laffer curve and ‘trickle down’. A focus on supply side economic solutions.
Basically, the aim is two fold.. enrich the 0.014% and stitch-up any incoming Democratic/Labour government to stop them from reinstating/implementing social programmes or reversing the privatisations. The method is to deliberately wreck the economy. As Citicorp said in 2005, the size of the debt doesn’t matter… the majority are irrelevant. Only the 0.014% who own 60% of global wealth, matter.
http://think-left.org/2012/08/20/has-george-osborne-been-taking-trans-atlantic-lessons-from-the-jude-wanniski-and-the-republicans/
Do you think the unspent £31 billion interest, lodged in the HMT’s Debt Management Office, will be wheeled out to mysteriously cut the deficit in 2014/15, thereby proving, that given time, Plan A will work?
Come 2014 absolutely any ploy will be possible….I expect Goldman Sachs are designing its off balance sheet nature for George right now
I wonder whether this is also the intention behind the increased contributions to the public sector pensions pot. I believe that I’m right in saying, that in the US, government makes a profit out of pensions.
[…] ‘… this loss can simply in part be due to a deliberate government give away at a time when it could not be afforded… some companies may now be anticipating the impact of new controlled foreign company rules in their payments on account. The Treasury said in Budget 2011 that these would cost £210 million in lost revenue this yearand I have always thought this a massive underestimate. This encouragement for companies to abuse tax havens to hide their profits may already be costing us dear. (7) […]