ITEM Club warns of disappointment for chancellor
Disappointing tax revenues despite strong economic growth
Professor
Peter Spencer, chief economic advisor to the
Ernst &
Young ITEM Club, has warned chancellor
Gordon Brown to expect
to be disappointed by this year’s tax figures, despite strong economic growth
overall.
‘This year’s figures will be a disappointment for the chancellor. Despite the
strong growth in the economy, tax revenues were no higher than last January.
Central government current receipts came in at £53.4bn, compared with £53.3bn in
January 2006,’ Spencer said.
‘Although payments of income tax were up 11%, helped by City bonuses,
corporation tax payments were 23% lower than last year. That is very surprising
given the strong growth in profits seen over the last two years. VAT payments
seem to have picked up along with the revival on the high street. They were up
8.5% on the year,’ he added.
Spencer said that looking at the financial year to date gives a better
perspective, one that is more favourable to the Treasury.
Further reading:
E&Y ITEM Club: No more rate rises this year
ITEM club lifts economic predictions
E&Y warns on tax rises