TUC says banks will take £19bn 'double subsidy'

(PA)

Banks will be accused today of knocking £19bn off their tax bills despite the multibillion-pound taxpayer bail-out of the sector.

A report by the Trades Union Congress (TUC) has found that British lenders will be able to avoid paying the sum on future profits by offsetting their losses during the financial crisis against future tax bills. The huge write-off amounts to as much as £1,100 for every family in the UK, the organisation will say.

The TUC report, Taxing Banks, has been written by Richard Murphy, a chartered accountant and director of Tax Research, which advises organisations on tax issues, and founder of the Tax Justice Network.

The report will argue that the £19bn counts as an effective "double subsidy" when set against the huge package of aid that banks have received in the form of direct bail-out and funding arrangements such as the Bank of England's "special liquidity scheme".

The report will also say that banks could soon be paying a lower rate of tax than small businesses – as little as 17 per cent. It argues that the corporate tax gap – the difference between the rate of tax set by the Government and the actual rate companies pay – has grown by an average of 0.5 percentage points a year over the past decade.

The TUC says that between now and 2015, the double subsidy could pay for switching the indexation of benefits from RPI inflation to CPI inflation (£5.84bn); housing benefit (£1.77bn); tax credits (£3.22bn); child benefit for higher rate taxpayers (£3 bn); estimated cuts to the science research budget (£3bn) and estimated cuts in resources used by HMRC to tackle tax avoidance (£2.1bn).

The TUC general-secretary, Brendan Barber, 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."