# Cutting Taxes Doesnt Mean Less Revenue



## odyssey06 (6 Mar 2016)

In recent years the UK cut its top rate of tax from 50p to 45p.

George Osborne claims that this brought in an extra £8 billion in tax revenue.
The situation may be more complex than that, because a lot of the 'extra' is due to people deferring income declarations to avail of the lower rate.
https://fullfact.org/economy/did-cutting-50p-rate-tax-raise-8-billion/

But, even if the cut in tax rate was revenue neutral, that means 5p per pound back in the pockets of UK workers to spend, with all its attendent rebounds in employment, VAT, reduced benefits spending.

It was noticeable in the recent Irish election that the numbers were very 'static' and there seemed to be a fixed idea of increase by Y get X etc
The UK experience (as did previous Laffer Curve examples) demonstrates that the situtation is not necessarily higher tax, higher tax take, and lower tax, lower tax take.

If cutting tax from 50p to 45p brought in the same revenue, it suggests that the UK were on the top plateau of the Laffer Curve (and may still be).


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