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Press watch: ‘Tax slump’

printer Mail

‘Whitehall departments are braced for more spending cuts after plunging tax receipts left the Treasury facing the prospect of a new black hole in the public finances this autumn.

‘Proceeds from corporation tax sank 20% in July compared with the same month last year, while spending on benefits was 6.2% higher. This forced the government to borrow £600m in July, compared with a surplus of £2.8bn in the same month last year. ‘The numbers shocked the City, which had been expecting a £2.5bn surplus. July is usually the second biggest month for tax receipts …

‘The Office for National Statistics revealed yesterday that total tax receipts were down by 0.8% on the year and corporate tax receipts 20% on the back of lower oil production in the North Sea, partly because of a leak at the Elgin field lasting 52 days.’

The Times, 22 August 2012

‘Britain’s public finances deteriorated in July as corporation tax receipts plunged, highlighting the coalition government’s struggle to balance the books while the economy is in recession … The Treasury said about £1bn of the £1.7bn annual fall in corporation tax was accounted for by lower revenues from oil and gas companies …

‘The OBR said it was possible the UK’s strange combination of falling gross domestic product and rising employment was squeezing companies’ profits and so their corporation tax payments.’

Financial Times, 22 August 2012