Corporation tax receipts rocket after rate is cut

. . . and they’re up 26pc since the Brexit vote

CORPORATION tax receipts have soared since the rate was cut as Britain’s booming businesses boost Treasury coffers.

Official figures from the Budget watchdog show the levy raised £57.6bn last year, when firms handed over 19pc of profits.

That was 44pc more than in 2010 when corporation tax was 28pc. Experts last night said the figures were ‘indisputable proof that cutting taxes is a great way to boost revenues’, encouraging enterprise and stimulating economic activity.

And in a sign that the economy has continued to prosper since the Brexit vote, corporation tax receipts have risen 26pc since the EU referendum.

This is far more than expected by the Treasury, where gloomy officials were concerned the vote to leave the Brussels club would hit profits and the economy.

The cut in corporation tax, from 28pc in 2010 to 19pc now, is also seen as a driving force behind the sharp recent increase in employment, which has pushed income tax and VAT receipts higher as more people earn and spend more.

This has handed the Treasury funds to pay for vital services such as the NHS and police.

But Jeremy Corbyn has said a Labour government would reverse the corporation tax cuts, hammering small and big business alike.

Tory MP John Redwood said: ‘Once again this shows the Treasury was far too gloomy in its postBrexit forecasts. And once again, cutting a tax rate has led to a revenues bonanza for the Exchequer. When will they learn to adopt this approach more widely?’ Mark Littlewood, director general at the Institute of Economic Affairs, said: ‘These figures are indisputable proof that cutting taxes is a great way to boost revenues, as well as encouraging enterprise.’

Figures from the Office for Budget Responsibility, the official Treasury watchdog, show corporation tax raised £40.1bn in 2009-10 when the rate was 28pc. Cut to 19pc, corporation tax raised £57.6bn last year, up 44pc since 2009-10.

In the final year before the Brexit vote, when corporation tax was 20pc, it raised £45.6bn. The £12bn increase over the two years following the Brexit vote was far larger than expected by the OBR.

Sam Dumitriu of the free market Adam Smith Institute think-tank said ministers should reduce tax on firms which invest. He said: ‘A competitive corporate tax rate has made Britain a more attractive place to do business.

‘As a result multinational corporations, including Starbucks and McDonalds, have relocated European headquarters to the UK, bringing jobs, investment, and tax payments with them.’