{"id":7029,"date":"2022-06-08T12:51:56","date_gmt":"2022-06-08T11:51:56","guid":{"rendered":"https:\/\/www.taxpolicy.org.uk\/?p=7029"},"modified":"2022-06-09T21:20:26","modified_gmt":"2022-06-09T20:20:26","slug":"uk-tax-vs-gdp","status":"publish","type":"post","link":"https:\/\/heacham.neidles.com\/2022\/06\/08\/uk-tax-vs-gdp\/","title":{"rendered":"Mrs Thatcher – tax snatcher?"},"content":{"rendered":"\n

Mrs Thatcher is still heralded<\/a> as a tax-cutter by many. But what actually happened to UK tax revenues, as a proportion of GDP, over her premiership?<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

They went up a lot, then down a fair bit, but not as much as they went up. Was this the result of specific policy decisions to raise tax? Or something else?<\/p>\n\n\n\n

But first – can we make any general statement about the relationship between tax vs GDP and the political party in power? Not really:<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One nice symmetry: the overall Thatcher increase in tax from 1979-1990 is almost exactly the same amount as the overall Blair\/Brown increase in tax from 1997 to 2010.<\/p>\n\n\n\n

So is politics irrelevant? Are the wild swings in fact just driven by recessions, with GDP contracting and so tax\/GDP increasing?<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

That looks like an inadequate explanation, only (arguably) fitting the data for the 1973-75 recession.<\/p>\n\n\n\n

What if we look at the actual changes in individual taxes?<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

Now we have it: three drivers for the big tax increase over 1979-82: VAT rising from 10% to 15%<\/a>, the North Sea oil boom<\/a>, and the increase in employer NICs<\/a>. Income tax was certainly cut, although not very dramatically, and that was more than overcome by the increase in VAT. <\/p>\n\n\n\n

Seems fair to say that the Thatcher tax increase was an intentional policy-driven rise in tax, not a mere incident of GDP contraction.<\/p>\n\n\n\n

All data from the wonderful OECD tax database<\/a>, with similar taxes consolidated together to produce a reasonable like-for-like comparison across 1965-2020. Full spreadsheet here<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

Mrs Thatcher is still heralded as a tax-cutter by many. But what actually happened to UK tax revenues, as a proportion of GDP, over her premiership? They went up a lot, then down a fair bit, but not as much as they went up. Was this the result of specific policy decisions to raise tax? […]<\/p>\n","protected":false},"author":1,"featured_media":7041,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ngg_post_thumbnail":0,"footnotes":""},"categories":[88],"tags":[103,120],"jetpack_featured_media_url":"https:\/\/heacham.neidles.com\/wp-content\/uploads\/2022\/06\/Screenshot-2022-06-08-at-19.28.08.png","_links":{"self":[{"href":"https:\/\/heacham.neidles.com\/wp-json\/wp\/v2\/posts\/7029"}],"collection":[{"href":"https:\/\/heacham.neidles.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/heacham.neidles.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/heacham.neidles.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/heacham.neidles.com\/wp-json\/wp\/v2\/comments?post=7029"}],"version-history":[{"count":10,"href":"https:\/\/heacham.neidles.com\/wp-json\/wp\/v2\/posts\/7029\/revisions"}],"predecessor-version":[{"id":7051,"href":"https:\/\/heacham.neidles.com\/wp-json\/wp\/v2\/posts\/7029\/revisions\/7051"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/heacham.neidles.com\/wp-json\/wp\/v2\/media\/7041"}],"wp:attachment":[{"href":"https:\/\/heacham.neidles.com\/wp-json\/wp\/v2\/media?parent=7029"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/heacham.neidles.com\/wp-json\/wp\/v2\/categories?post=7029"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/heacham.neidles.com\/wp-json\/wp\/v2\/tags?post=7029"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}