A special report from Reuters, not normally exactly a hotbed of anti-capitalism propoganda, brings some provocative research findings about Britain’s financial sector:
Research by Reuters shows … the impact of any big bank departures on the economy, government finances and the City of London’s pre-eminence as a financial centre would be extremely limited…
In terms of taxes alone, Commercial Secretary to the Treasury and former banker James Sassoon told members of the House of Lords in February that large banking groups were expected to contribute around 20 billion pounds ($30 billion) in tax for the 2010-11 tax year.
Crucially, though, that figure includes indirect contributions such as income tax paid by bank employees. Of his 20 billion pound tax-take figure, Sassoon says the proportion contributed by pay-as-you-earn income tax and other social contributions is 80 percent, with corporation tax making up the remaining 20 percent.
You can read the full report here.
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8 Comments
I notice that Reuters talks about the way a bold report today would “help the Conservative-led UK government strike the balance it needs between sounding tough on an industry whose excesses anger the public, and appeasing some of the Conservatives’ top donors.”
I hope the Coalition is not in the business of ‘appeasing donors’ to one of its consttituent parties!
£20 billion not much? Well it be enough to raise the tax threshold to take a hundreds of thousands of people out of tax altogether. Would prefer the tax burden to fall more heavily on those that remain if you drive the banks to New York?
Guido Fawkes – I don’t know if you read the article to the end, but one of the arguments in it is that the downsides of hosting these institutions have become obvious in recent times.
‘But any new host to HSBC would have to be ready to act as lender of last resort to an institution with a balance sheet bigger than all but the world’s five largest economies.’
And this is not to mention HSBC’s likely overexposure to Chinese property which is plainly a bubble.
The £20bn quote was talking about the grand scheme of things. Plainly £20bn is not a sum you or I have in our back pockets, but the article makes the point, reasonably, that there is a balance in the risks of carrying these institutions and the costs of a smaller sector. I thought it was a pretty reasonable point, if one I don’t wholly agree with.
Interesting piece in the Economist recently chronicling the second thoughts of some finance sector execs who had left London for Switzerland:
http://www.economist.com/node/18289282
Main problems are lack of office space, difficulty in finding accommodation, restricted choice of schools and the sheer boredom of many Swiss towns and cities where there is nothing to do and a fog of petty regulations governs every activity.
My brother, who lives and works in the tax-avoidance nirvana of Zug, took two years to find a flat big enough for his wife to join him, and the local schools open to non-Swiss are so poor his daughter goes to boarding school in England. Also, most of the restaurants close at weekend!!!
Bob Diamond has decided Barclays must increase its risk appetite amid internal expectations at the bank that a key measure of its profitability will fall or stay stagnant this year
Per the FT 5 April 2011
Barclays share price rises in reaction to the issue of the Vickers Commission report
11 April 2011
I await the reaction from all the LibDems arguing here that the Government was going to break up the banks. Yet another climb down by Vince – funny how he always goes to ground when such announcements come out.
@Mark Pack
Are we talking about a full scale operational move or, as has been the case thus far, brass nameplates being shipped to another domain and stuck on a small office (like Henderson Global Investors BIG move Dublin)? Consequently, we’ve yet to witness the former because London is a great place for banks and financial institutions.
I just can’t see a major British bank being accepted overseas – take the US which could be willing because of the size of it’s economy, for example, they don’t tend to take kindly to to tax ‘avoidance’ and evasion. It would really cost those banks enormous sums of money and changes in practice. In HSBC’s case, I thought company directors could be executed if the, errrrrrrrr, books didn’t quite add up.
Isn’t pretty disingenuous for banks to quote payroll taxes when they give these figures? They haven’t paid the tax, their employees have!
“In HSBC’s case, I thought company directors could be executed if the, errrrrrrrr, books didn’t quite add up.”
Sorry should have made this clear – this is assuming they settle in China as it has an economy that can potentially host them.
As for my suggestion about books not adding-up – I only meant it in the paying tax in China context.
The Reuters reports does though highlight the nonsense of LD policy of decreasing the bonus of bankers and increaing the profits going to shareholders.
GIven the losses the many banks have which ensure they won’t be paying Corporation tax for years and the low rate it is at anyway it seems madness to want to decrase the pay of bankers at Goldman Sachs (taxed at 65%) in favour of giving more money to their shareholders (taxes at 23% if we are lucky)