EU money doesn't come out of thin air. It comes from taxpayers. The UK is a net contributor to the EU so the UK government could choose to fund all current commitments and still be better off.
Except for...revenues are not going to stay the same.
For example, George Osborne has just proposed to slash the corp. tax rate from 20% to 15%, in order reduce (not eliminate) the almost certain reduction in UK investment.
Last year, CT net receipts were £ 42 billion[1]. At the current 20% rate. At 15%, that would be £ 31.5 billion, for a reduction of £ 10.5 billion. Let's divide that by 52 weeks and you get £ 200 million. Which happens to be £ 10 million more than the UK's net contribution to the EU budget.
So all your "savings" just evaporated just with corporation tax alone, and that's assuming that Osborne's plan works and there is no reduction in activity/investment, which is dubious.
It isn't that simple. There isn't a linear relationship between the tax % and the revenue to the treasury. Lower taxes encourage more companies to set up in the UK.
We saw this recently in the UK when the top rate of income tax was raised to 50% and the income to the treasury actually fell.
They had already announced rates were going down to 17% so it's only another 2%. This is a tax that is very difficult to collect and becoming more so over time.
The UK is a net contributor to the EU so the UK government could choose to fund all current commitments and still be better off.
As another commenter has posted [1], this had already been debunked in December last year [2]:
This claim is based on the UK being a “net contributor” to the EU budget as a whole. The size of that net contribution varies, but according to analysis [..] about 0.6% of nominal GDP. Models of impact to the UK economy on Brexit vary. [..] even the more optimistic assessments of the UK’s economic performance following a Brexit [..] model an immediate loss in GDP for the transition years following a Brexit. The size of that loss is substantially larger than the current net contribution of the UK to the EU budget.
[Brexit] is a sure-fire short term loss, wiping any free money for R&I investment until at least a decade down the line – according to the most optimistic scenarios.
mpweiher|9 years ago
For example, George Osborne has just proposed to slash the corp. tax rate from 20% to 15%, in order reduce (not eliminate) the almost certain reduction in UK investment.
Last year, CT net receipts were £ 42 billion[1]. At the current 20% rate. At 15%, that would be £ 31.5 billion, for a reduction of £ 10.5 billion. Let's divide that by 52 weeks and you get £ 200 million. Which happens to be £ 10 million more than the UK's net contribution to the EU budget.
So all your "savings" just evaporated just with corporation tax alone, and that's assuming that Osborne's plan works and there is no reduction in activity/investment, which is dubious.
[1] https://www.gov.uk/government/uploads/system/uploads/attachm...
endeavour|9 years ago
We saw this recently in the UK when the top rate of income tax was raised to 50% and the income to the treasury actually fell.
https://en.wikipedia.org/wiki/Laffer_curve
tonyedgecombe|9 years ago
tremon|9 years ago
As another commenter has posted [1], this had already been debunked in December last year [2]:
This claim is based on the UK being a “net contributor” to the EU budget as a whole. The size of that net contribution varies, but according to analysis [..] about 0.6% of nominal GDP. Models of impact to the UK economy on Brexit vary. [..] even the more optimistic assessments of the UK’s economic performance following a Brexit [..] model an immediate loss in GDP for the transition years following a Brexit. The size of that loss is substantially larger than the current net contribution of the UK to the EU budget.
[Brexit] is a sure-fire short term loss, wiping any free money for R&I investment until at least a decade down the line – according to the most optimistic scenarios.
[1] https://news.ycombinator.com/item?id=12081215
[2] http://blogs.lse.ac.uk/brexitvote/2015/12/05/debunking-the-m...