Tax cuts can bring in more revenue

One of the main arguments ahead of the budget is the one about what changes you get in revenue if you put tax rates up and if you cut tax rates. This is especially important and hotly contested over business taxes. UK corporation tax revenues increased as George Osborne cut rates. The Republic of Ireland collects proportionately much more tax from business by having a much lower rate than us and attracting many large businesses to locate more in the Republic. Indeed, in 2022 Ireland collected  24.4% of its total tax revenues from corporation tax with a 12.5% rate. The UK only managed 9% of tax revenues with a 19% rate.

There are also studies showing that if tax free shopping is allowed for visiting foreigners the UK will collect more tax overall, as it will boost  taxation on shop profits and shop employee incomes and on the hotels and other facilities the visitors use. UK revenues have been very sensitive to overall economic growth rates. rising more than official forecasts when times are improving, and producing less revenue than expected when growth falls away.

I noticed in the recent Sunday Times survey of economic forecast outturns the official OBR performed relatively badly in the table for 2022, reminding us how difficult it is for Chancellors to  make  the right policy  judgements when the supporting forecasts can be well off.


  1. Mark B
    February 21, 2023

    Good morning.

    I am afraid it is a case of wait and see. Personally we will get a lot of ‘headline guff’ in order to boost flagging Tory support.

    Where the real tax rises will be coming to hit us will be through increased Council Tax, the Mayors (Khan) Precept, and the numerous schemes such as ULEZ, Digital ID and the associated on the road price charging. The latter being of real concern as this affects freedom of movement, even walking. I kid you not !

    Less money and more to the State will further lead to decline. Money talks ! Money is really what makes things go around and, if you can control how money is spent, then you effectively can not only control the markets, you can control the people. And given the ability of various government bodies such as the OBR and the BoE to manage even their own affairs, I confess that I am very worried then those same bodies, plus others, think that they can manage mine.

    Orwellian does not even come close.

    1. PeteB
      February 21, 2023


      Wait and see indeed, although with the SNP intent on pursuing different income tax rates in Scotland we will get an excellent case study on how different rates affect one country. Be interesting to see if anyone does the analysis,..

      1. Peter Parsons
        February 22, 2023

        I suggest you look west to the USA where this has been the norm for years. Different states have and set different rates of state income tax, different rates of sales tax, different minimum wages etc. and that’s before the counties and cities (who also have their own tax rating powers) get involved as well. That’s real devolution.

    2. THUTCH
      February 21, 2023

      According to estimates from the 2021 budget report, the new rates of corporation tax are meant to raise £11.9bn in 2023/24, rising to £17.2bn in 2025/26.
      Miles Dean, head of international tax at accountancy firm Andersen LLP, said these estimates are ‘sincerely optimistic at best, but more likely deliberately delusional’. ‘The corporation tax rise will also likely further heighten inflation, which has already reached historic levels,’ he added. ‘The government is sending the message that we’re simply not pro-growth, but rather pro-tax.’

  2. Donna
    February 21, 2023

    Since Johnson’s flawed “deal” doesn’t allow us to compete with the EU, why don’t we ask Von der Leyen what the EU will permit?

  3. Barrie Emmett
    February 21, 2023

    Inflation is set to fall in the coming year, without any assistance from HMG. The litany of taxes described above and the final line of the comment are a stark warning to the taxpayers of times ahead. Big government was not in the referendum.

  4. Sakara Gold
    February 21, 2023

    5,000 years ago we see the first record of taxation in ancient Egypt, where the Pharaoh collected a tax equivalent to 20 percent of all grain harvests. At the time Egypt was without coined money, so grain represented a tangible store of value that could easily be collected, traded and redistributed throughout society.

    Julius Caesar was the first to implement a sales tax – a 1 percent flat rate that was applied across the entire Empire. Under Caesar Augustus, the sales tax was 4 percent, closer to a rate we see today in many U.S. state sales taxes. Here, its 20%

    Property taxes were imposed on the Anglo Saxons under William the Conqueror in England. Famously, Lady Godiva rode a horse through the streets naked in protest of the property tax rate her husband was forced to pay.

    I was taxed 40% when I earned, taxed 20% when I spent and I’m taxed on my savings interest over £500 now that I’m retired. My estate will be taxed when I pass over. With inflation at 10% the government is now stealing my capital, as the BoE interest rate is only 4%

    Enough is enough. Eventually the masses will rebel over taxation.

    1. Narrow Shoulders
      February 22, 2023

      Got to pay for your beloved net zero somehow SG.

  5. Lifelogic
    February 21, 2023

    Sensible cuts in red tape, tax complexity, employment complexity, compliance complexity also increases the tax take as people have more time for profitable & productive activity. Firing people in the state sector doing little of value or even of negative value to get real productive jobs also increases tax take and decreases government expenditure too. Excessively high taxes also means more people leaving, working less or spending more time and money with tax planners.

    We need a plan to kill as many non productive jobs as possible in compliance, regulation, the legal and tax planning professions, in employment and other compliance… The government is a massive generator of pointless & unproductive jobs and wasted time. This in areas like net zero, tax compliance, HS2, the pointless degrees, the wars on motorists, landlords and the self employed, the war even on wood fires…

  6. Lifelogic
    February 21, 2023

    Leave far more money with the people and let them choose how best to spend or invest it. The state is useless at doing so.

  7. Bloke
    February 21, 2023

    Erroneous forecasts support only misleading information.
    Who wants to buy a satnav showing the way to your savings is a sharp turn over the edge of a cliff?
    The OBR IS well off: making easy money from what we pay them for their misleading forecasts.
    The Treasury needs an Office of Budget Refunds to hold those risky forecasters to account.

  8. Dave Andrews
    February 21, 2023

    Even if the CT rate could be cut back to where it was previously at 19%, can business trust the government not to hike it again?
    The capricious government doesn’t inspire confidence for anyone looking to invest from within or outside the country.

    1. Berkshire Alan
      February 22, 2023


      Constantly moving goalposts means that no one can plan efficiently for anything, a responsible decision taken today can look stupid a couple of months down the line, thus companies and people tend to go where there is a record of stability and where sensible planning is possible.

  9. Bloke
    February 21, 2023

    Many people are happy paying tax when it is charged at a moderate rate and spent efficiently on providing quality services. Those people realise their better public roads, education, health and other services are providing the good value they willingly paid for.
    Now however, so many people are angered at being forced to pay high rates of tax that are recklessly wasted, or spent on things opposed to their wishes, or paid to encourage others to enter their land illegally to consume free of charge homes and benefits that they themselves are restricted as indigenous folk from receiving themselves.
    Cuts are needed, but cut out what is wrong!

  10. Berkshire Alan
    February 21, 2023

    Our tax is far too high, too complicated, far too widespread, and has been for years, simple fact.
    Just look at the costs and taxes you need to pay just to exist now.
    Council tax, energy tax, water supply tax, house insurance tax, then Vat on anything purchased, other than some foods.
    Then if you have, or need a car, fuel tax, insurance tax, Road tax, ULEZ charges, Tax on servicing.
    Unlike many now, OAP’s cannot afford to go on strike for a better State pension, and given the personal allowance has now been frozen, even that is now liable to income tax.

  11. Thutch
    February 21, 2023

    According to estimates from the 2021 budget report, the new rates of corporation tax are meant to raise £11.9bn in 2023/24, rising to £17.2bn in 2025/26.

    Miles Dean, head of international tax at accountancy firm Andersen LLP, said these estimates are ‘sincerely optimistic at best, but more likely deliberately delusional’. ‘The corporation tax rise will also likely further heighten inflation, which has already reached historic levels,’ he added. ‘The government is sending the message that we’re simply not pro-growth, but rather pro-tax.’

  12. Christine
    February 21, 2023

    The Conservative party was hijacked many years ago by taking over the MP candidate selection process. We are now seeing the end game where the party is being destroyed from within. The democratic process of choosing a leader was removed from the members and a hugely unpopular PM and chancellor foisted upon us. We see the same plan at work in all our major institutions. Nothing this government does is for the benefit of the British people. Their plan seems to be our ruination and ultimate control by a new global government. Expect things to get much worse when our freedom to travel and spend our own money is taken away from us. Welcome to the new China.

    1. Original Richard
      February 21, 2023

      Christine ;


      This will be driven by the false claim that the world will end if we in the West do not impoverish ourselves by transitioning from cheap, abundant and reliable fossil fuel energy to meagre supplies of expensive and intermittent electrical energy supplied by weather dependent renewables and rationed through the use of smart meters.

  13. Peter Martin
    February 21, 2023

    Possibly lower taxes can bring in more revenue on that particular tax. However, the tax take in total is what matters. Of course one way to increase the tax take is for Govt to spend more money into the economy in the first place. It might be seem a silly suggestion but there previously has been genuine surprise that tax revenues have fallen as spending has been tightened. Alternatively, we can encourage everyone to spend more by increasing their borrowing rather than their savings. Raising interest rates is likely to do just the opposite!

    The tax take could also be increased if less money went off overseas to pay for our net import bill. Once it does that it can’t easily be taxed back by the UK government. However it has been a long time since Government showed any concern about our trade imbalance.

    So what does Government really want to achieve? We have a desire for a fully floating pound, for balanced trade, low taxes, high levels of personal savings, low government debt and a balanced government budget. We can have some of these some of the time but not all of these all of the time.

  14. Bert Young
    February 21, 2023

    Tax is a punitive condtiion in our society ; it limits initiative , it distracts business , it is a huge cost factor in the Civil Service and gives entirely the wrong message to international organisations . Singapore is a god example to the Sunak / Hunts of this world .

  15. Original Richard
    February 21, 2023

    Why are the public and the policy makers expected to rely on just one forecaster, the OBR?

    The BoE when deciding the Bank Rate use a committee of 9 members, 4 of which are external and independent.

    There are other independent forecasters and why are their forecasts not given equal publicity and considered to provide equally useful forecasts to those of the OBR?

    Especially when the OBR forecasts are so often proved to be inaccurate.

    We have more than one pollster and the track record of each is used to predict their accuracy, so why has this not been done with economic forecasters?

    1. Original Richard
      February 21, 2023

      The answer is of course that the one forecaster, the OBR, can be directed by those who make the policies to provide the forecasts that will justify their wanted policies.

    2. hefner
      February 24, 2023 ‘Forecasts for the UK economy: a comparison of independent forecasts’, 18 January 2023, No.426.

  16. margaret
    February 21, 2023

    How old are the studies.?. on-line buying has changed everything

  17. - Cosmos Currency Exchange
    February 27, 2023

    […] Cabinet minister Sir John Redwood declared “Ireland collects £4,000 of corporation tax per person. The UK collects just £1,000 per person. […]

Comments are closed.