Book contents
- Frontmatter
- Contents
- PREFACE
- ACKNOWLEDGEMENTS
- INTRODUCTION AND SUMMARY OF STUDY
- PART I The General Equilibrium Model of the UK – Structure, Data and Model Solution.
- CHAPTER 1 General Equilibrium Analysis of Tax and Subsidy Policies
- CHAPTER 2 The Basic Variant General Equilibrium Model
- CHAPTER 3 Model Treatment of UK Taxes, Subsidies and Government Expenditure
- CHAPTER 4 Calibrating the model
- CHAPTER 5 Benchmark Equilibrium Data Set
- CHAPTER 6 Specifying Values for Substitution Elasticities
- PART II Empirical Analysis of the UK Tax/Subsidy System Using the General Equilibrium Model
- SUMMARY AND CONCLUSIONS
- APPENDIX A Structure of the Basic Variant Model
- APPENDIX B Notes to Tables Appearing in Chapter 5
- APPENDIX C Notes on Programming and Computation
- BIBLIOGRAPHY
CHAPTER 3 - Model Treatment of UK Taxes, Subsidies and Government Expenditure
Published online by Cambridge University Press: 04 August 2010
- Frontmatter
- Contents
- PREFACE
- ACKNOWLEDGEMENTS
- INTRODUCTION AND SUMMARY OF STUDY
- PART I The General Equilibrium Model of the UK – Structure, Data and Model Solution.
- CHAPTER 1 General Equilibrium Analysis of Tax and Subsidy Policies
- CHAPTER 2 The Basic Variant General Equilibrium Model
- CHAPTER 3 Model Treatment of UK Taxes, Subsidies and Government Expenditure
- CHAPTER 4 Calibrating the model
- CHAPTER 5 Benchmark Equilibrium Data Set
- CHAPTER 6 Specifying Values for Substitution Elasticities
- PART II Empirical Analysis of the UK Tax/Subsidy System Using the General Equilibrium Model
- SUMMARY AND CONCLUSIONS
- APPENDIX A Structure of the Basic Variant Model
- APPENDIX B Notes to Tables Appearing in Chapter 5
- APPENDIX C Notes on Programming and Computation
- BIBLIOGRAPHY
Summary
As indicated in Chapter 2 all major taxes and subsidies operating in the UK (post April 1973) enter our model. This chapter discusses the treatment of each, and outlines their major discriminatory features. Numerical values used for tax rates are reported in Chapter 5.
An overview of the 1973 Tax/Subsidy System in the Model
In the 1973 public sector accounts used in the model gross tax revenues are £25.0 billion and expenditures on subsidies are £5.3 billion. UK NNP in our data for 1973 is £69.8 billion. 35.8% of NNP is collected in taxes and 7.6% paid in subsidies. The major taxes are income tax (£7.3 billion in 1973), specific excises (chiefly on hydrocarbon oil, tobacco, and drink; a combined total of £3.9 billion), national insurance and related contributions (£3.9 billion), corporation tax (£3.2 billion), rates (£2.6 billion), and value added tax (£2.2 billion). The major subsidies are those to local authority housing (£3.1 billion) and nationalized industries (£1.4 billion). These are listed in Table 3.1 along with the major features of each and their treatment in the model.
Each of these is treated as an ad valorem tax or subsidy. Some are treated as taxes on factor use with differential rates by industry, some are production taxes on intermediate use, some are consumer taxes on commodity purchases, and some tax incomes of consumers. The model treatment adopted for each tax and subsidy is motivated primarily by the discriminatory features which each introduces.
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- Information
- UK Tax Policy and Applied General Equilibrium Analysis , pp. 64 - 98Publisher: Cambridge University PressPrint publication year: 1985