IFS Publishes Analysis Of July's Public Finance Figures

by Robin Pilgrim, LawAndTax-News.com, London

21 August 2008

The Institute for Fiscal Studies made public on Wednesday its analysis of 'Public Sector Finances July 2008', which was unveiled earlier in the week in a joint publication by the Office for National Statistics (ONS) and Her Majesty's Treasury (HM Treasury).

Carl Emmerson, Deputy Director of the IFS, observed that:

“The Government has had to borrow more than twice as much during the first four months of the financial year than in the same period last year to meet the gap between what it spends and what it raises in tax revenue. This increase in borrowing is due both to weaker than expected receipts and higher than expected spending."

"The increase in borrowing over the first four months is much bigger than the 22% rise implied by what the Treasury was expecting for the year as a whole at Budget time."

He continued: "On the receipts side recent years have seen corporation tax receipts grow less quickly than the Treasury has forecast and this trend appears set to continue. Overall receipts of corporation tax in the first four months of this financial year were just 3.2% higher than the same months last year, whereas meeting the Budget forecast would require growth over the year as a whole of 10.6%."

"July is usually an important month for corporation tax receipts, and receipts from North Sea oil companies have more than doubled from the same month a year ago – bringing in an extra GBP2bn to the Treasury. But receipts of corporation tax from other companies fell by a quarter, costing the Treasury a similar GBP2bn."

However, corporation tax receipts for July 2008 were 1.5% higher than in the same month last year, the IFS revealed.

Recommended