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Exchequer returns October 2016 - Peter Vale commentary

Peter Vale Peter Vale

While little in today's figures will reflect Budget changes, there will be relief in Government circles that the first post Budget set of Exchequer figures are broadly on target.

Similar to last year, the key feature of October’s figures is another strong showing on the corporation tax front. It now appears more likely that the corporation tax increase witnessed this year is a sustainable one and may act as a quasi-buffer should Brexit impact on VAT and payroll taxes next year.

The modest income tax cuts in last month's budget will only kick in from January.  A critical question is what impact both the Budget and Brexit will have on consumer confidence and how this will impact on the key Christmas period for retailers. Even prior to Brexit, we had seen consumers exercise caution notwithstanding the additional disposable income available.

Looking ahead to next year, higher earnings and more people at work mean income tax receipts should remain strong. Disposable income will be higher which should translate into stronger VAT receipts, subject of course, to the impact of external factors, Brexit in particular.