Comment: Treasury coffers | Opec talks

OCTOBER is usually a big month for companies paying their corporation tax, so no surprise that the UK Treasury raked in a bit of extra cash last month. However, corporate tax receipts were hardly bulging – up a modest 1.8 per cent on the year.

George Kerevan. Picture: Jane Barlow.

The UK economy might be growing but with consumers hanging on to their wallets, and the strong pound hurting exports, there is not a lot for the Treasury to get its hands on.

As a result, public sector net borrowing in the first seven months of this financial year is actually 6.1 per cent higher than in 2013.

That is definitely not where “prudent” George Osborne wanted to be, just six months shy of the election.

Don’t expect too many real giveaways in Chancellor Osborne’s ­Autumn Statement, due on 3 December.

The situation in Britain contrasts starkly with the United States, where tax receipts are running at record levels. The US 2014 tax year ended in September. Federal revenues topped $3 trillion (£1.9tn) for the first time, bringing the deficit to its lowest level during the Obama presidency. Revenue contributions by individuals rose 6 per cent but corporate tax income leapt 17 per cent.

Why is the US Treasury doing ­better than the British one, revenue wise? I hesitate to say it, but one reason is higher taxes in God’s Own Country. Payroll taxes are up sharply this year and tax cuts for the wealthy, originating from the Bush administration, have been rescinded.

What will the new Republican Congress do with this improved financial situation? The big debate in Washington concerns cutting the headline rate of corporation tax, which is among the highest in the advanced economies. Cutting US corporation tax would be a cunning move to offset the impact of the soaring dollar.

Nobody rushing to see Russia join Opec club

BRENT crude climbed above $80 a ­barrel this week, adding a bit of zest to the FTSE, but oil prices are not going to recover unless Saudi Arabia decides to cut production.

Cue a battle at next Thursday’s summit meeting of the Opec petroleum cartel in Vienna.

The Saudi regime is happy to keep pumping for two reasons: firstly, to undermine US shale gas production, and secondly to deny funds to Islamic State, its deadly foe, which is busy ­exporting illicit oil via Turkish middlemen.

But oil at $80 is robbing other Opec members of vital cash. Especially near-bankrupt (and socialist) Venezuela, which is openly frustrated by feudal Saudi Arabia’s refusal to support a cut in crude output.

Ordinarily, no-one in Opec would care what Venezuela thinks, but western sanctions against Russia may have changed that. Russia is the world’s biggest oil exporter, but is not a member of Opec.

Venezuela’s new president, Nicolas Maduro, has contrived a cunning plan to link Moscow and Opec, the better to pressurise the West. It would also give Venezuela a Russian ally to ­counter the Saudis.

I’m sceptical.

Russia or not, the Saudis seem happy to live with crude at $80 a ­barrel. The inside word is they will only cut production if the price falls to $70.

As for Venezuela, everyone knows its decrepit oil industry is toast if the Americans ever open the much-delayed Keystone XL pipeline, which runs from the oil tar sands of Alberta straight to the Gulf of Mexico.

SUBSCRIBE TO THE SCOTSMAN’S BUSINESS BRIEFING

• Get the latest business headlines from a variety of news sources emailed to your inbox each morning