UK public sector borrowing last month unexpectedly rose. Labour's Rachel Reeves blames the coalition's deficit reduction plan for the reverse, yet Labour's ripping wheeze for raising GDP implies more borrowing.
VAT and income tax seem to be coming in in line with the coalition's plans.The shortfall is largely due to poor corporation tax returns. Labour is silent on means for increasing the tax take from companies, but this is hardly surprising given their cosiness with large corporations during the Blair/Brown years.
I wonder whether something else is happening in big plcs. Corporation tax is due to fall to 23% in 2013/14. Could it be that expenditure is being brought forward while accounting for sales is being pushed back?
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It seems I was wrong about income tax. It has come in below estimate, but the reason appears to be the same as the one I advanced in my main posting: the temporary 50% rate ends in 2013, to be replaced by 45%. Those who are able to are deferring money by way of salary (e.g. by taking it in the form of dividends).
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