Corporation tax and VAT receipts down in May, figures show

Date: 19th June 2009

The Treasury witnessed a sharp drop in both corporation tax receipts and income from VAT revenues over the course of May, it has been revealed.

According to the latest figures to be released by the Office for National Statistics (ONS), corporation tax receipts for the month were 27 per cent down on May 2008 levels, while VAT revenue fell by 18 per cent over the same 12-month period.

While May is usually associated with a drop in taxation income, with businesses and entrepreneurs having filed their tax returns in April, this figure nevertheless represents one of the most marked reversals on record.

When combined with public sector net borrowing of £19.9 billion in May, the month saw the total outstanding government debt rise to £774.8 billion, more than half of UK GDP, the ONS figures also show.

Commenting on these statistics, Howard Archer of IHS Global Insight, stated: "The public finances for May were absolutely dire, deteriorating even more than feared as tax revenues continued to be decimated across the board."

At the same time, the number of Britons claiming unemployment benefits was revealed to have risen by 80 per cent over the past year as a result of the current economic situation.