Taxing problems..
Luckily for politicians voters have short memories, remember when after the Credit Crunch George Osborne cut corporation tax to “bring in more money”. Based on the ridiculous but useful theory that cutting taxes always brings in more money as it boosts economic activity.
This wilful misreading of the Laffer Curve has been exposed by the fact that the current Chancellor is increasing Corporation tax to bring in more money.
But increasing Corporation Tax means that the surcharge on the banks would have taken their level of tax even higher so it is being cut from 8% to 3%, according to the FT. Apparently higher taxes would would have made the banks uncompetitive and presumably cost tax revenue.
It’s all very confusing. Of course, if the government hadn’t dragged the banks and the rest of the financial sector out of the EU against their will, they might have remained more profitable. They might even have paid more tax as a result.
We might never know because, strangely, the government has never fought back against Project Fear by having the Treasury update its assessment of the costs of Brexit.
Which would doubtless show it was making money not losing it. Strange.
Economics, trade and Brexit, not necessarily in that order but the dog always comes first.