Outlook The banks have been banging on about the inequities of the banking levy ever since George Osborne quite reasonably decided they ought to pay something for the privilege of being underwritten by the taxpayer.
A study by the Cambridge Judge Business School suggests that we shouldn’t pay much attention to their bellyaching.
It has found that while banks’ profits have largely recovered from the impact of the financial crisis, the corporation tax they pay on those profits has not. In the 2005-06 financial year they paid £7bn, some 20 per cent of the total corporation tax take. In 2012-13 the figure was at just £2.3bn. The difference is roughly what this country pays out in unemployment benefits, and the much-moaned-about banking levy – held up as a potential reason for quitting the UK by the likes of HSBC and Standard Chartered – hasn’t come close to making up the gap.
The study’s authors don’t offer a conclusive explanation, complaining that the banks’ limited disclosure makes doing so impossible. However, they speculate that it might be down to more profits originating from outside the UK, and partly to generous UK tax exemptions. They also wonder whether at least some UK profits are being reclassified to other, lower-tax jurisdictions.
Following a long and vocal campaign against it, the internet retailer Amazon has said it plans to alter its corporate structure in a way that might lead to it pay more UK tax. The Cambridge study suggests those behind that campaign might want to shift their focus to a new group of targets.Reuse content