It’s more likely that George Osborne is the next Doctor Who than he will balance the government’s books – Tax Research UK
I have warned, successively, that the Budget forecasts on tax revenue growth were ludicrously high both for this year and for several to come, writes Richard Murphy.
I also suggested that the OBR was discredited by endorsing them. As the table below shows, I did the maths to show why that had to be the case (it wasn’t hard to do). And now, as the FT reports:
“Britain’s economic recovery has generated far less tax revenue than forecast, raising the prospect of even deeper spending cuts after the general election to balance the budget.
“The latest blow to the public finances was an admission from the Office of Budget Responsibility on Monday that income tax receipts – the biggest single source of government revenue – are likely to fall short of government targets this year, despite record levels of employment.”
Three immediate issues follow from this. The first is that the quality of Treasury forecasting is dire. No one in their right minds could have believed the levels of growth forecast in March 2014 as shown in this table, the data for which is taken straight from the March 2014 budget with my extrapolation of growth rates added:
It wasn’t just growth in tax revenues that was forecast, it was growth way beyond any underlying level of economic increase in activity that was suggested was going to happen this year, and that was always utterly implausible.
Second, we have to consider the possibility that the Treasury just lied when putting forward these growth projections. They are so ridiculous, that has to be the best possible explanation for them.
And we have to the consider that the OBR may have been complicit in this – because if it was truly independent it should have been flagging up how unlikely this revenue growth was in March, and not now.
And what does it all mean?
It means all Osborne’s economic claims are bunkum – but you should read Mr Murphy’s analysis at Tax Research UK.
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For “record levels of employment” read “record numbers of people forced out of benefits into starting ‘businesses’, record numbers of people having their benefits sanctioned for the stupidest of ‘reasons’, and record numbers of people working part-time or in zero hours contracts”.
This government disgusts me.
Meanwhile, over at The Guardian: http://www.theguardian.com/education/2014/oct/14/schools-providing-basic-necessities-to-disadvantaged-pupils *shakes head in despair*
Yes; it was never going to produce the results Osborne predicted because his metaphorical castle was built on sand.
That’s what politicians get when they make no attempt to build a proper working economy.
Agreed. It doesn’t take a genius to work out that austerity means less spending (on employees who pay tax and buy stuff) which means fewer taxes collected (income and value added). Surely the sensible move would have been to spend our way out of the recession, rather than cut our way further into one. Tory logic though, Mike! :(
As I was saying on a Facebook group yesterday when the story first broke; –
They freeze pay for the great majority so that their earnings fall behind inflation, and put large numbers of people in temporary work, while cutting taxes for the rich… and then there seem to be startled noises when they find the tax revenues are down on what they hoped?
The people doing all this – not only Osborne – are so fixated on reading the Milton Friedman regs manual and just assuming that what it says will happen will really happen, that they don’t even pause to apply logic. They are just THICK.
And yet survey after survey shows they have the public’s trust when it comes to the economy.
Tell a lie often enough…
well i do not understand much if any of that . but no doubt taxes will go up in 2015 if that lot get back in. promises of taxing DLA and possibly state pension for those on pension credit will be next..(did i see somewhere they were talking of stopping pension credit??? or am i just imagining that.)
No you didn’t imagine it. The idea is that Pension Credit won’t be needed when the flat rate pension is universal.
well with carney in the bank him outside with rtu ids the figures are never going to be truthfull jeff3