Treasury set to take corporate tax hit
A further ramification of financial market woes lies in the Treasury's subsequent loss in tax revenues
The volatility of corporate tax is being tested by the Treasury as the
banking sector continues to buckle.
According to a report on
the government is expecting a fall in tax revenues, primarily due to its
dependence on tax from financial services companies.
Yvette Cooper, chief secretary of the Treasury, said that ‘of course the
global credit crunch is affecting the UK’s tax receipts from financial services
and stamp duty’.
The proportion of financial sector revenues has increased significantly over
the past 25 years – jumping from 12% to contributing approximately a quarter of
total revenues in recent times.
Bill Dodwell, tax partner at Deloitte, said the fall in corporate tax
revenues could be as much £7bn to £45bn.