New report – Tax Receipts and Government Spending

A new report from TRL Insight, Tax Receipts and Government Spending.

It looks at spending on services and goods by central government over recent decades, particularly since 1997 as consistent datasets are available for this whole period. Other than the exceptional Covid year of 2020-21, it identifies the early 2000s as the only period in which there was particularly strong growth in spending on services and goods. It shows that this was mostly affordable because of rising tax bases and shrinking bills for other expenditure. The contribution from rising tax rates was at most a small part of the mix and there wasn’t any net borrowing in real terms over the period 1997-98 to 2005-06.

It is argued that putting in place conditions conducive to growing tax bases is the key to implementing manifesto spending pledges. This runs directly counter to a prevailing narrative that putting up burdensome taxes on citizens who are already struggling is the only way to fund improvements in public services.