This is no ordinary recovery. Not only has it taken a hell of a long time to do not very much, it’s seen collapsing productivity and very little wage growth, even for those who appear to be highly skilled. As a result of all this, even though the economy grew at over 3 percent, the tax revenues didn’t increase at the same rate.
As Sarah O’Connor reported in the FT:
[T]ax receipts have grown just 2 per cent so far this year, compared with the 5 per cent growth the Office for Budget Responsibility forecast in March.
As Ben Chu’s chart shows, most of the rise in tax revenue since the recession is due to VAT.
Record numbers of people in employment, it seems, hasn’t led to record levels of income tax.
When you break out the figures for income tax, as Michael O’Connor did earlier this week, there is a marked difference between receipts…
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