How has the UK corporation tax raised so much revenue?

Michael P. Devereux (), Rachel Griffith () and Alexander Daniel Klemm

No W04/04, IFS Working Papers from Institute for Fiscal Studies

Abstract: We analyse a puzzle in the UK corporation tax: by both historic and international standards corporation tax revenues have been high while the statutory rate has been low. Possible explanations include the following: changes in tax law that may have increased effective tax rates; other factors such as higher profitability or different macro-economic conditions may have led to higher effective tax rates; and finally the size of the corporate sector may have increased. We find evidence for all three explanations, although none would be sufficient in itself. To the extent that higher profits, particularly financial sector profits may have led to high revenues, there are doubts as to whether revenues will continue to be so strong.

Keywords: Corporation tax; revenue (search for similar items in EconPapers)
JEL-codes: H25 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-acc, nep-pbe, nep-pub and nep-reg
Date: 2004-02
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Persistent link: http://EconPapers.repec.org/RePEc:ifs:ifsewp:04/04

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