Britain's biggest companies last year generated their largest collective tax receipt in three years, as a combination of rising profits and increases in VAT and income tax fuelled a 14 per cent jump in contributions.
The so-called Hundred Group of UK companies, together with their staff and customers, paid the exchequer a total of £67.7bn in the year to March 2011, according to PwC's annual estimate of their tax contribution, which it has been compiling since 2005. It represents 13 per cent of the UK Government's total tax receipts and was fuelled by a 60 per cent rise in corporation taxes to just under £10bn.
Oil and gas companies remain the biggest generator of taxes in the Hundred Group – which comprises the FTSE 100 and another 17 companies – with hydrocarbon producers, their staff and customers contributing 28.9 per cent of total tax contribution, or £19.5bn.
At the other end of the spectrum, so-called planet taxes – environmental levies such as air-passenger duty – remained the smallest contributor to the exchequer, falling 3.4 per cent to just £900m.
"The impact of these [planet] taxes continues to be small despite the Government's stated position that climate change is one of the most serious threats that the world faces," the PwC report noted. "The recession and the need to repair public finances has taken a priority in recent Budgets," PwC added.
Overall, the Exchequer benefited from strong growth in tax receipts, as company profits rebounded and the 2.5 percentage point increase in VAT to 17.5 per cent in January 2010 pushed up revenues.
The introduction of the 50 per cent higher rate of tax for people earning £150,000 or more in April 2010 and the withdrawal of personal reliefs for higher income earners also pushed up receipts.
Furthermore, Andrew Packman, a PwC partner, thinks it likely tax receipts will increase further in the current tax year because of the other VAT rise and improving corporate prospects. PwC's survey was based on the taxes paid by 91 of the Hundred Club, which it used as a basis to estimate the combined contribution of all 117 companies.Reuse content