Increased corporate tax receipts help government record surplus for October

Increased corporate tax receipts help government record surplus for October

	Published : Sat, 19 Nov 2005 14:05 By : Phil Bateman Print this Story

LONDON: There has been a substantial surge in tax payments by companies in Britain, which helped the government to get back into the black in October. Economists describe it as a boost for the chancellor of the exchequer Gordon Brown as he prepares for his Pre-Budget Report on December 5. The surplus is seen as the largest for a month since 2002.

The Office for National Statistics said the government received a net cash repayment of 5 billion pounds in October.

The Treasury’s preferred yardstick of the government’s finances -- public sector net borrowing -- also showed a surplus of 2.2 billion in October, compared with a deficit of 1.7 billion pounds in October last year.

There has been a massive 23.4 per cent annual increase in company tax receipts, as North Sea oil companies have reaped record profits from high oil prices. Overall tax collection for the month rose 9.6 per cent, to 40.7 billion pounds.

Meanwhile, public sector net borrowing so far for the financial year has been put at 20.884 billion pounds, nearly five billion pounds lower than a year earlier and compared with a full year forecast of 31.9 billion pounds (down from 37.2 billion pounds for the last year).

Brown's pre-budget report will be released amidst charges that public finances are out of control and that taxes will eventually have to rise by around 10 billion pounds a year.

Economists point out that if the trend continues through budget time next year, Brown may be able to accomplish the decline in deficit he had projected.

Brown has said earlier this year that the current cycle had begun in 1997, rather than 1999, which would allow the Treasury to include an extra 9 billion pounds of surpluses. October is traditionally a strong month for corporation tax receipts and analysts said there might be a further surge in January, the other key month for receipts.

In line with the upbeat mood, the FTSE 100 index of leading shares reached a four-year high yesterday.

The Treasury meanwhile said continued control of Whitehall spending cut down on expenditure, which grew 4.1 per cent so far this year, much below the budget forecast of 5.8 per cent. However, in spite of increased revenues, total receipts growth is failing to meet the forecast of 9.2 per cent for the year to April, posting growth of 7.1 per cent in the year to date.