Sunday, July 09, 2006

Total Taxes as a % of GDP

In one of my previous posts. I alluded to the fact that while Labour had changed the mix of taxes, the total tax take as a % of GDP had remained broadly stable, give or take a % point.

FinFacts had an interesting article showing the total tax take as a % of GDP for EU member states over the last decade.

I thought people might be interested in the UK figures:

Total taxes as a % of GDP

1995 36.7%
1996 36.3%
1997 36.8%
1998 37.8%
1999 38.1%
2000 38.7%
2001 38.5%
2002 37.0%
2003 37.0%
2004 37.7%

This belies the Tory tabloid rant about overall taxes rising. Some taxes have risen, but others have been cut. Generally when Labour cuts taxes, it's for the poor. And total tax as a % of GDP has actually been falling since 2001. I expect this will continue to be the pattern while Labour is in power, it will fluctuate a bit with the business cycle, but will remain broadly stable.

3 comments:

dizzy said...

"the total tax take as a % of GDP had remained broadly stable, give or take a % point."

Translation:Total tax as a % of GDP has been stable except for when it hasn't.

Some further reality checks:

1: The trend is up, plot it and see.
2: Total tax as % of GDP in 2004 is 0.9% higher than it was in 1997 as part of an upwards trend.
3: "total tax as a % of GDP has actually been falling since 2001" - no it hasn't it rose from 2003 into 2004, plus see point 1
4: These figures fail to account for fiscal drag
5: "This belies the Tory tabloid rant about overall taxes rising." - The FT is a tabloid?

snowflake5 said...

Dizzy, GDP fluctuates with the business cycle, therefore the total tax-rate will fluctuate up and down, give or take 1%.

Re your point about fiscal drag - you seem not to understand that a)we are looking at total taxes, including corporation taxes, taxes on north sea oil etc and b), GDP moves in line with national income, - if there really was fiscal drag as you claim, then the total tax take as a % of GDP would be rising sharply. It isn't. Think about it.

dizzy said...

"GDP fluctuates with the business cycle, therefore the total tax-rate will fluctuate up and down, give or take 1%."

- that is better than the last statement which said it was "stable expect when it isn't"

Now, why did you ignore points, 1, 2,3, and 5?

p.s. Can I get a link? You'll see that you are linked from my blog.