Yesterday the government published the figures for tax revenue and spending for March, and the full financial year figures for 2013-14.
These show that the deficit has been cut from the inherited peak levels to £107bn last year. Public sector debt as a proportion of our National Income has fallen from the peak level of 151.7% in 2009-10 to 132.4% now. Whilst debt to pay for extra spending has continued to rise, state banking debt has been reduced.
The deficit has been brought down by collecting £100bn a year of extra tax revenue, compared to an increase of £66bn in current public spending. (2013-14 compared to 2009-10) Labour’s cuts in capital spending were largely implemented, but have been eased more recently.
The full year figures confirm the damage a higher rate of CGT has done to CGT revenues. They fell slightly again last year compared to 2012-13, which in turn was well down on the previous year.
Conversely, the higher rates of VAT and Stamp Duty have added to revenues as planned.
The strategy in cash terms still rests on collecting more tax revenue from a growing economy. As the economy grows, so the proportion taken as public sector activity will fall.