This study looks at the composition and trends of tax revenues in the UK. It provides a brief overview of the rather complicated system of different taxes in the UK. Three main taxes—personal income tax, national insurance contributions (NICs) and value added tax (VAT)—are shown to account for about three quarters of all tax revenues and that this has been stable over a period of time. In comparison to other countries the UK is similar in its tax composition to both the US and France, where the same three types of tax dominate revenues. It is much less similar to both Malaysia and Argentina. The study examines monthly UK tax revenues for these three taxes, using econometrically estimated trends. It finds that, in constant price terms, revenues have grown slowly and steadily over time, broadly keeping pace with growth in real GDP. Tax revenue forecasting in the UK is mainly undertaken by an independent body which publishes forecasts at the level of receipts for individual taxes. This considerably reduces the risk of political bias in these revenue forecasts.
Part of the book: Taxes and Taxation Trends