£19 billion banker bonus
(Photo captioned: NASUWT General Secretary Chris Keates joins TUC General Secretary Brendan Barber and other union leaders to protest against tax evasion by UK banks)
NASUWT’s General Secretary, Chris Keates, has joined other trade union leaders to expose the loophole that will see UK banks avoid paying £19 billion in tax.
Despite being bailed out by taxpayers during the financial crash, analysis by the TUC has shown that UK banks will avoid paying £19 billion of tax on future profits by offsetting their losses during the financial crisis against their tax bills. This is equivalent to more than £1,100 for every family in the UK.
The TUC Report, The Corporate Tax Gap, reveals that as well as benefitting from an £850 billion bailout from taxpayers and the Bank of England during the recession, banks are able to offset their £19 billion of tax losses between 2007 and 2009 against paying tax on future profits.
The Report, authored by tax specialist Richard Murphy, has calculated this double subsidy from the accounts of the five main UK high street banks and HM Revenue & Customs (HMRC) data.
The report goes on to detail how banks, by utilising financial loopholes, could soon be paying a lower rate of tax than small businesses.
The TUC has calculated that the banks’ £19 billion double subsidy could pay for a huge swath of planned services that are earmarked for cuts between now and 2015, including:
• switching the indexation of benefits from retail prices index (RPI) to consumer prices index (CPI) (£5.84 billion);
• housing benefit (£1.77 billion);
• tax credits (£3.22 billion);
• child benefit for higher rate taxpayers (£3 billion);
• estimated cuts to the science research budget (£3 billion); and,
• estimated cuts in HMRC resources to tackle tax avoidance (£2.1 billion).
Ms Keates joined other union leaders outside the Houses of Parliament to highlight the findings of the report.
She said: “Banks caused the global financial crash and triggered the recession that produced the deficit. Yet not only did they take almost a trillion pounds from taxpayers to bail them out, they are now using the losses caused by their irresponsibility to cut their tax bills for years to come.
“Once again it is ordinary hard-working people who have to foot the bill for their recklessness and irresponsibility.”
The TUC Report is available at www.tuc.org.uk/extras/corporatetaxgap.pdf.
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