This mornings FT Thursday morning as official figures show extremely weak tax revenue

halight

Thursday morning as official figures show extremely weak Thursday morning as official figures show extremely weak tax revenues in the crucial month of January and lay bare the cost of the government’s capital injections into Britain’s banks.
The Treasury is bracing for investor disappointment given expectations for a cash surplus of £16bn for January, only £9bn worse than the bumper receipts in the same month last year.
EDITOR’S CHOICE

PM seeks G20 action against tax havens - Feb-18


Surveys highlight gathering speed of decline - Feb-18


City staff vacancies fall 64% and pay levels dip - Feb-18




But the government injected £17bn of capital into the Lloyds Banking Group alone last month, making those market predictions far too optimistic.
Stripping out one-off hits to the public purse, government revenues are also likely to be hit hard in January, since it is the month when income tax is traditionally boosted by bankers’ bonuses and corporation tax receives the fruits of financial sector profits. All of these tax receipts will reflect the credit crisis and the recession for the first time on Thursday.
In the last few months of 2008, tax revenues started to fall dramatically below forecasts and the deterioration has been so rapid that the January figure for public sector net borrowing runs the risk of showing no surplus for the first time since comparable statistics were published in 1993.
Much of the distress in government financing stems from the banking crisis that has decimated profitability in the sector, which contributed 25 per cent of corporate tax revenues in recent years.
But the partial nationalisation of some banks will also make a big difference to the government’s books. The Office for National Statistics is engaged in a process of assessing how much of the liabilities of these banks be counted as government debt.
It has already decided that the Royal Bank of Scotland, Northern Rock and Bradford & Bingley are, in effect, public corporations because the government has significant control over their operations. It is likely to make a similar determination on Lloyds Banking Group in the near future.
When a bank goes on the government’s books all the liabilities count as public sector net debt, but complex accounting rules require the ONS only to net-off the banks’ most liquid assets. The result is that the headline level of public sector net debt is set to rise close to 250 per cent of national income – or £3,750bn – in coming months.
Neither the Treasury nor outside experts believe this figure accurately reflects what British taxpayers really owe. The Institute for Fiscal Studies has said in its Green Budget: “The focus for fiscal policy should be whether the public sector expects to make a profit or loss once these positions have been unwound.”
Ministers have yet to make an estimate of the likely ultimate liabilities but officials recognise it will not be zero. Goldman Sachs estimates the cost will be close to 8 per cent of national income – £120bn – while thinking within the International Monetary Fund suggests 13 per cent – just short of £200bn.
Copyright The Financial Times Limited 2009in the crucial month of January and lay bare the cost of the government’s capital injections into Britain’s banks.
The Treasury is bracing for investor disappointment given expectations for a cash surplus of £16bn for January, only £9bn worse than the bumper receipts in the same month last year.
EDITOR’S CHOICE

PM seeks G20 action against tax havens - Feb-18


Surveys highlight gathering speed of decline - Feb-18


City staff vacancies fall 64% and pay levels dip - Feb-18




But the government injected £17bn of capital into the Lloyds Banking Group alone last month, making those market predictions far too optimistic.
Stripping out one-off hits to the public purse, government revenues are also likely to be hit hard in January, since it is the month when income tax is traditionally boosted by bankers’ bonuses and corporation tax receives the fruits of financial sector profits. All of these tax receipts will reflect the credit crisis and the recession for the first time on Thursday.
In the last few months of 2008, tax revenues started to fall dramatically below forecasts and the deterioration has been so rapid that the January figure for public sector net borrowing runs the risk of showing no surplus for the first time since comparable statistics were published in 1993.
Much of the distress in government financing stems from the banking crisis that has decimated profitability in the sector, which contributed 25 per cent of corporate tax revenues in recent years.
But the partial nationalisation of some banks will also make a big difference to the government’s books. The Office for National Statistics is engaged in a process of assessing how much of the liabilities of these banks be counted as government debt.
It has already decided that the Royal Bank of Scotland, Northern Rock and Bradford & Bingley are, in effect, public corporations because the government has significant control over their operations. It is likely to make a similar determination on Lloyds Banking Group in the near future.
When a bank goes on the government’s books all the liabilities count as public sector net debt, but complex accounting rules require the ONS only to net-off the banks’ most liquid assets. The result is that the headline level of public sector net debt is set to rise close to 250 per cent of national income – or £3,750bn – in coming months.
Neither the Treasury nor outside experts believe this figure accurately reflects what British taxpayers really owe. The Institute for Fiscal Studies has said in its Green Budget: “The focus for fiscal policy should be whether the public sector expects to make a profit or loss once these positions have been unwound.”
Ministers have yet to make an estimate of the likely ultimate liabilities but officials recognise it will not be zero. Goldman Sachs estimates the cost will be close to 8 per cent of national income – £120bn – while thinking within the International Monetary Fund suggests 13 per cent – just short of £200bn.
Copyright The Financial Times Limited 2009


Anyone got any spare change?????????

thriftybabe

I think the tax revenues will obviously getting less and less as the year goes on! I fill out a monthly tax return for employees and subcontractors and have noticed it getting less and less as the months go by! This time last year we were sending three quarters more than we are now in tax revenues. Next month even less and the following month possibly nil:eek: . I cannot believe I am saying this but I really would not mind paying tax in the next months although i doubt that will happen.

Yep I think it is going to be a bad one.

StevieJ

The concentration on tax havens, does this pre-empt another large tax increase for high earners :eek:

Reaper

This cracks me up. Right back in November it became obvious Obama wanted to crack down on tax havens but Brown was against it. From the Guardian:

President-elect Barack Obama plans to crack down on international tax havens, including Jersey, Guernsey and the Isle of Man, within weeks of taking power in January, putting him on a collision course with Gordon Brown.

Now, however, dear old Gordon realises he is not going to win so he switches sides and plans to present it as his own idea to the G20?! :rotfl:

You've got to admire the cheek of the man.

matbe

Reaper wrote: »

This cracks me up. Right back in November it became obvious Obama wanted to crack down on tax havens but Brown was against it. From the Guardian:
Now, however, dear old Gordon realises he is not going to win so he switches sides and plans to present it as his own idea to the G20?! :rotfl:

You've got to admire the cheek of the man.

The only cheeks id like to see would be [EMAIL="the@ss"]the @ss[/EMAIL] cheeks as he bent over to receive a damn good whipping with a cat o nine tails .