Banks 'will knock £19bn off tax take'

The Trades Union Conference (TUC) has accused UK banks of exploiting the recession to avoid paying billions of pounds of taxes.

The organisation’s latest report, The Corporate Tax Gap, authored by Richard Murphy, founder of the Tax Justice Network, claims the country’s financial institutions will be able to offset £19 billion of tax losses incurred between 2007 and 2009, during the economic downturn, against paying tax on future profits – in spite of having been saved from collapse by a £850 billion bailout from the public purse and the Bank of England.

The offset figure is equivalent to more than £1,100 for every family in the UK, according to the TUC document, which bases its figures on the accounts of five high street banks – HSBC, Royal Bank of Scotland, Barclays, Lloyds TSB and Lloyds Banking Group (formerly HBOS) – and on HMRC data.

It argues that banks could soon be paying a lower rate of tax than small businesses, as the ‘corporate tax gap’ – the difference between the rate of tax set by the Government and the actual rate paid by companies – has grown by an average of 0.5% a year over the past decade.

Between 2000 and 2009, the effective corporation tax rate fell from 28% to 21%, and with the rate soon to drop to 24%, the UK's largest companies, including banks, will soon be paying an effective rate of 17%, which is 3% lower than small businesses, claims the TUC report.

‘The Government's bank levy is small change compared to this huge loss, as the business-as-usual bonus levels show,’ said TUC general secretary Brendan Barber in reference to the predicted £19 billion 'loss' to Treasury coffers.

Issue Extract

corporatetaxgap.pdf

Issue: 4277 / Categories: News , Bank of England , Barclays , Brendan Barber , HBOS , HSBC , Lloyds Banking Group , Lloyds TSB , Richard Murphy , Royal Bank of Scotland , Tax Justice Network , Trades Union Conference , TUC , Companies