Not a pretty sight. Ritchie tries inflation adjustments

As I’ve already noted, only cash counts, so that the relevant figures are £9.182 billion in 2013/14 and £8.975 billion in 2012/13.

The first thing to note is that CPI to March 2014 was 1.6% but on a heavily downward trend: during most of the year it had been over 2% and in September 2013, a fair mid year measure for comparison purposes, had been 2.7%. What that means is that in real terms the 2013/14 yield recovery was in real terms lower than in 2012/13.

Sigh.

Inflation figures are given as the twelves months to……so CPI in March 2014 is for the period April 2013 to March 2014. Sept 2013 figure is for Oct 2012 to Sept 2013.

So, what is the correct CPI to be using for the tax year April 2013 to March 2014 (I think we can forget the first few days of April 2014 being in that previous tax year, no?)? Why it’s the CPI as reported for the previous 12 months in March 2104, isn’t it?

So this is an example of Ritchie just making shit up to fit his narrative, isn’t it?

Plus ca change

8.975 x 1.016 is less than 9.182. Recovery is therefore up after inflation.

Oh, and of course, the idea that only cash counts in a system which has both deferred tax and tax due (for example, some parts of corporation tax and also self-employment taxes) in the year after the economic activity they refer to is also pure bollocks.

7 comments on “Not a pretty sight. Ritchie tries inflation adjustments

  1. I’m sure I must be missing something but on what earthly basis is he conflating tax receipts with economic rec

  2. Are you sure about that? He’s comparing the value of sums collected over the course of 2013/14 with those collected over the course of 2012/13… Not a sum collected on the March 31 end-point.

    If you can assume payments are evenly spread, you’d want to deflate each year’s sum by the average price level (deflator) over each tax year wouldn’t you? But if you can’t do that isn’t a mid-year to mid-year the next best thing?

    No fan of Richard’s… Just genuinely puzzled here. Is the point that actually payments are not spread through the year, so end-to-end is better?

  3. Payments can be daily, weekly, monthly, quarterly, biannually or annual. Most tax is PAYE/NICs (monthly), VAT (quarterly).

  4. as other folks are saying, you ought to use some kind of average inflation figure, preferably weighted by the timings of actual receipts.

  5. On the Murphmonster’s site, someone who clearly knows a lot more than RM patiently explains why Murphy is wrong after which Murphy basically says that he may not know what he is talking about but he likes the answer he has come up with and so is sticking to it.

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