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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.
Authors
Research Associate University of Oxford and Oxford Centre for Business Taxation
Michael joined the IFS in 1982 and he has been a Research Fellow since 1990 and a Professor of Economics at the University of Oxford.
CPP Co-Director, IFS Research Director
Rachel is Research Director and Professor at the University of Manchester. She was made a Dame for services to economic policy and education in 2021.
Alexander Klemm
Working Paper details
- DOI
- 10.1920/wp.ifs.2004.0404
- Publisher
- IFS
Suggested citation
M, Devereux and R, Griffith and A, Klemm. (2004). How has the UK corporation tax raised so much revenue?. London: IFS. Available at: https://ifs.org.uk/publications/how-has-uk-corporation-tax-raised-so-much-revenue (accessed: 29 March 2024).
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