Volatility reflected in the tax system

The trends reflected in the Total Tax Contribution survey over the years show a stark difference in the volatility of taxes borne when compared with taxes collected. Movements in the level of taxes borne have been largely driven by corporation tax, a tax which is directly related to profits. Rapid falls in profitability during the recession sparked a similarly rapid fall off in the amounts of corporation tax paid to Government, and recovery in profitability in the wake of the recession has brought a similar recovery in tax payments.

Taxes collected on the other hand include a range of taxes that are not directly related to profitability including employment taxes, VAT and excise duties. The trend for these taxes has been much more stable. With Government looking for stability and predictability, these taxes have proven to be a more predictable source of revenues.

It is interesting to note that profit taxes, including corporation tax, account for 19.5% of all of the taxes paid by The Hundred Group members. This suggests that receipts from The Hundred Group are vulnerable to the volatility of these taxes, a volatility which is clearly seen in the results of the Total Tax Contribution surveys.