Corporation Tax Buoyancy and Revenue Elasticity in the UK

John Creedy and Norman Gemmell

No 712, Working Papers from Oxford University Centre for Business Taxation

Abstract: Observed changes in corporation tax revenues from year to year, which include the effects of changes in tax rates, deductions and compliance, appear to be highly volatile relative to profits, the tax base. This paper examines whether the ‘built-in’ fiscal drag properties of corporation tax can be expected to display similar properties. Simple, conceptual modelling demonstrates that the corporate tax revenue elasticity does indeed display this property in the presence of regular cyclical fluctuation in profit growth, suggesting that much of the observed volatility is inherent to the corporation tax system.

Date: 2007
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Related works:
Journal Article: Corporation tax buoyancy and revenue elasticity in the UK (2008)
Working Paper: Corporation Tax Buoyancy and Revenue Elasticity in the UK (2007)
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