Labour Corporation Tax Policy
Discussion
Listening to Radio 4 this morning, the Labour spokesman said that they would put Corporation Tax back up in order to pay for their spending pledges including NHS pay increases, university tuition fees etc.
I decided to spend 10 minutes establishing, from ONS data, whether this was a coherent money raising proposal and I set the result out below.
Essentially, Corporation Tax revenues as a percentage of GDP are at approximately the average of the last 45 years, higher levels are as a result of economic booms and there is a ~0.5 negative correlation with the standard tax rate, so if they put the rate up, tax revenues as a percentage of GDP should go down, likely at the same time as GDP stagnates or decreases due to the policy.
This means that, in 10 minutes, I was able to clearly establish, with independent statistics, that their proposition is rubbish. Untrained monkeys would have a more coherent policy.
I decided to spend 10 minutes establishing, from ONS data, whether this was a coherent money raising proposal and I set the result out below.
Essentially, Corporation Tax revenues as a percentage of GDP are at approximately the average of the last 45 years, higher levels are as a result of economic booms and there is a ~0.5 negative correlation with the standard tax rate, so if they put the rate up, tax revenues as a percentage of GDP should go down, likely at the same time as GDP stagnates or decreases due to the policy.
This means that, in 10 minutes, I was able to clearly establish, with independent statistics, that their proposition is rubbish. Untrained monkeys would have a more coherent policy.
Edited by loafer123 on Wednesday 26th April 08:43
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