Economists Urge Scotland to Vote No......

hugoshavez

michaels wrote: »

As gen mentions elsewhere I thinking working out how to share out income and expenditure is very tricky. For example with income is corporation tax adjudged to be earned by the region where the companies who pay it are based or should it be shared according to population or according to where the profit is earned. Similarly with spending, if govt departments are in certain regions then they are effectively allocating national spending to one part of the country (which in turn will also drive tax revenue in that part of the country etc).

Tricky. On one hand you could say that the profits derived from each constituent nation could be allocated to its own tax take, as happens now internationally. Hence Starbucks etc being lambasted for not paying tax in the UK.

It'd probably open up for even more avoidance, but at this stage Corporation Tax avoidance has grown so much that its becoming a vanishingly small proportion of total tax take. Some would argue it'd be better to do away with it altogether, which'd at least help to put SMEs on a more equal footing with multinationals.

chewmylegoff

hugoshavez wrote: »

Tricky. On one hand you could say that the profits derived from each constituent nation could be allocated to its own tax take, as happens now internationally. Hence Starbucks etc being lambasted for not paying tax in the UK.

It'd probably open up for even more avoidance, but at this stage Corporation Tax avoidance has grown so much that its becoming a vanishingly small proportion of total tax take. Some would argue it'd be better to do away with it altogether, which'd at least help to put SMEs on a more equal footing with multinationals.

Corporation tax receipts are >£40bn per annum - so the fourth biggest revenue raiser behind income tax, NI and VAT. As a % of the total tax take they have remained pretty similar for the last 30 years despite the headline rate being cut from 52% to 24% so I'm not sure the stats really confirm that corporation tax avoidance has grown rampantly or that it is insignificant (at approx 8% of total tax receipts).

I think it is estimated that if you put 1% on all three rates of income tax that would raise about £5bn a year. So - if we abolish corporation tax, would you be happy to pay another 8% of your taxable income to the government? I ruddy well wouldn't be!

hugoshavez

chewmylegoff wrote: »

Corporation tax receipts are >£40bn per annum - so the fourth biggest revenue raiser behind income tax, NI and VAT. As a % of the total tax take they have remained pretty similar for the last 30 years despite the headline rate being cut from 52% to 24% so I'm not sure the stats really confirm that corporation tax avoidance has grown rampantly or that it is insignificant (at approx 8% of total tax receipts).

I think it is estimated that if you put 1% on all three rates of income tax that would raise about £5bn a year. So - if we abolish corporation tax, would you be happy to pay another 8% of your taxable income to the government? I ruddy well wouldn't be!

Hmm, if that's right I've picked up some bad info somewhere.

Off to have a look, but if you have a link handy to historical proportions please feel free.

HAMISH_MCTAVISH

chewmylegoff wrote: »

So - if we abolish corporation tax, would you be happy to pay another 8% of your taxable income to the government? I ruddy well wouldn't be!

To be fair we all pay for that anyway through the price of goods and services, so abolishing corporation tax and replacing it through income tax wouldn't make much difference to the total amount people pay in tax.

hugoshavez

Far from perfect, but indicates a pretty dramatic decline in a period where overall tax take vs GDP has been relatively steady.

Didn't see a definition of "Business and other revenue" but they do place the current figure at £46.7b so Corporation Tax must be almost all of it.

http://www.ukpublicrevenue.co.uk/revenue_chart_1975_2010UKp_14c1li111lcn_60t

chewmylegoff

http://www.ifs.org.uk/bns/bn09.pdf

Page 37 has a pretty picture.

As you can see, whilst the graphs are measuring different things (% of total tax take vs. % of GDP - as you point out tax as % of GDP has been fairly stable so that doesn't matter much), what is causing your graph to plummet is likely to be the "other revenue" part.

hugoshavez

chewmylegoff wrote: »

http://www.ifs.org.uk/bns/bn09.pdf

Page 37 has a pretty picture.

As you can see, whilst the graphs are measuring different things (% of total tax take vs. % of GDP - as you point out tax as % of GDP has been fairly stable so that doesn't matter much), what is causing your graph to plummet is likely to be the "other revenue" part.

It is pretty, showing as page 38 for me.

What's maybe most remarkable is the complete lack of imagination/courage any of our politicians have had since there have been almost no dramatic changes.

The expansion of VAT, and the long term decline in CT/Poll Tax are interesting.

As are lost revenue from the big privatisation periods.

What maybe struck me most was the almost constant level of what are often called "stealth" taxes.

But yeah, you're right, Corp tax seems steady. Maybe I've become mixed up with UK and US stats.

Generali

michaels wrote: »

As gen mentions elsewhere I thinking working out how to share out income and expenditure is very tricky. For example with income is corporation tax adjudged to be earned by the region where the companies who pay it are based or should it be shared according to population or according to where the profit is earned. Similarly with spending, if govt departments are in certain regions then they are effectively allocating national spending to one part of the country (which in turn will also drive tax revenue in that part of the country etc).

Same with a lot of taxes. VAT for example will be judged to be raised where the VAT return is rasied rather than where where the money is spent.

If nations within the UK are to keep their taxes this needs addressing. What would happen if NI set a lower corporation tax rate and then got to keep the massive VAT flows as a result? There be a beggar thy neighbour tax setting race to 0%.

hugoshavez

Generali wrote: »

Same with a lot of taxes. VAT for example will be judged to be raised where the VAT return is rasied rather than where where the money is spent.

If nations within the UK are to keep their taxes this needs addressing. What would happen if NI set a lower corporation tax rate and then got to keep the massive VAT flows as a result? There be a beggar thy neighbour tax setting race to 0%.

Nothing of this magnitude appears to be on the horizon, for Scotland or anywhere else.

Of course I realise you may be interested in the question academically.

lostinrates

HAMISH_MCTAVISH wrote: »

To be fair we all pay for that anyway through the price of goods and services, so abolishing corporation tax and replacing it through income tax wouldn't make much difference to the total amount people pay in tax.

It could potentially make a huge difference to the amount individuals pay in tax.