Corporate Tax Payments Ease Pressure On Gordon Brown

by Robert Lee, Tax-News.com, London

22 August 2005

It emerged last week that pressure has eased on the UK's public finances after the latest set of tax revenue figures revealed a surge in corporate tax receipts in July.

Official figures showed that corporate tax revenues increased by 21.4% last month compared to a year earlier, helping the government to achieve a surplus of £2.9 billion, up from £2 billion last year. There was also an 18% rise in National Insurance receipts in July as the overall tax take rose by 6.3% compared to last year.

However, the figures are unlikely to dampen criticism of Chancellor Gordon Brown's fiscal policies, and many economists remain of the view that Brown will be forced at some stage to put up taxation to stick to his self-imposed 'Golden Rule' of borrowing only to invest rather than cover current expenditure.

Although income tax, National Insurance and capital gains tax receipts were up 8.3% in the first four months compared to last year - in line with Treasury predictions - the Exchequer remained in the red to the tune of £15.3 billion, £4 billion higher than at the same point last year.

Chancellor Gordon Brown is relying on a 28.8% increase in corporate tax payments in 2005/2006 in order to meet his budget targets. At present, these revenues are up by only 15.4% for the current financial year, and will need to surge by 37.4% in the rest of the year to achieve the Chancellor's target.

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