More bank taxes imposed by Chancellor will be detrimental to Britain
Additional taxes announced by George Osborne in last week’s Summer Budget will leave banks with a £40 billion tax bill lasting 10 years.
Latest figures reveal that the entire banking sector will have to fork out the massive sum due to five extra taxes, not including corporation tax and national insurance, going back to 2010/11 until 2020/21.
Banking lobby group, the BBA, made the calculations following the Chancellor’s new tax on bank profits, whilst simultaneously reducing the amount raised through the bank levy.
It comes as no surprise then that the move has incensed the industry, particularly as it comes on the back of the current campaign in opposition to the 8 per cent surcharge targeting the smaller banking institutions, because of emphasis on UK, not international profits.
The chief executive of the BBA, Anthony Browne said this week that he believes the banking industry is being “singled out” by Osborne: “Banks expect to pay their fair share of tax. But they do not expect to be se singled out by Chancellor for repeated raids which make it harder to lend to businesses and create jobs.
“It is this environment which led the chief executive of one foreign bank to compare the behaviour of our government to that of an African dictatorship.”
So what will these additional taxes mean for Britain as a whole?
Well, £25 billion of the £40 billion amount this will be payable via the bank levy, but coupled with the surcharge, a further £6.5 billion will be generated. However, I’m confident that the other recently introduced taxes could severely damage Britain’s reputation, making the country a much less appealing place for banks and potentially other financial services sectors, to do business.
Not only that, but the aforementioned bank levy has been increased nine times between 2011 and last week’s budget, which has led to thousands of banking jobs in the UK being lost.
Furthermore, as I mentioned in a previous blog earlier this year, Britain’s financial services industry has, I believed, reached a tipping point, which is having a strong influence on major investment decisions.
You only have to look at HSBC’s possible head office relocation from London to Hong Kong. This should ring very loud alarm bells that ongoing tax increases and progressively more stringent regulations could cause great harm to the UK’s financial services industry.
So rather than continually ‘bashing’ the banks with tax hikes, what Britain needs is a tough yet fair, ‘open for business’ policy, like other major worldwide financial centres have enjoyed for numerous years.
This can only be positive for the country and its financial services sector as a whole.