Sunday 9 February 2014

Sunday, February 09, 2014 Posted by Jake No comments Labels: , , , , , , , ,
Posted by Jake on Sunday, February 09, 2014 with No comments | Labels: , , , , , , , ,

[UPDATE DECEMBER 2016: The total compensation paid by the banks reached £40bn as of October 2016, and will no doubt rise further. That means the banks swindled as much out of customers through PPI alone as they paid in corporation taxes between 2005 and 2013. It's as if they got us suckers to pay their taxes for them.]

We are told by by bank lobbyist from the industry and from politics that banks must be kept free of effective regulation because they provide vital tax revenue to the country. Standing in the economic ruins immediately after the 2008 crash, Boris Johnson said of financial regulation, with as straight a face as he can manage:

“Sensible taxes, light regulation and reasonable employment law will mean businesses are able to pay the taxes for the things we need to do.”

So how do the banks get the money to pay these taxes?

In February 2014 Lloyds Bank increased its PPI mis-selling compensation fund by £1.8 billion. This took Lloyds' total for this scam to £10 billion, and the UK banking industry's total to about £20 billion as at February 2014. This total may well continue to rise over time.

Figures from HMRC show that this £20 billion, swindled out of their customers, is the same amount as the total taxes paid by the banks since 2008 in Corporation Tax, Bank Levy, and Bank Payroll Tax. Note that this £20billion of ill-gotten gains doesn't include other swindles such as Interest Rate Swaps, LIBOR rigging and others.

Some may argue that the banks paid less since 2008, after they crashed, and will pay more now they are recovering. But this £20billion is more than the total Corporation Tax paid by banks in their most boomingest years, the three years before the 2008 Bust.

Banks also attempt to take credit for their employees' PAYE taxes (income tax etc). On the 11th January 2011, the Barclays CEO, Bob Diamond, appeared before the UK Parliament’s Treasury Select Committee. Under questioning by the Labour MP Mr. Chuka Umunna, Diamond stated:

Bob Diamond: We paid £2 billion in tax last year to HMRC and over the last six years weve paid about £12.5 billion in tax. I think thats the number youre looking for.

Q556 Mr Umunna: Of that £2 billion, what percentage were non-payroll taxes?

Bob Diamond: I don’t have the percentages.

Q557 Mr Umunna: So it could be that most of that is actual payroll tax paid by your employees, but in terms of the corporate tax we don’t really know the figure, do we, Mr Diamond?

Bob Diamond: That’s the payment from Barclays to HMRC.

Mr Umunna: Yes, but what percentage of that was non-payroll tax?

Bob Diamond: I don’t have the percentages.

It turned out that less than 6% of the £2bn Diamond was trumpeting was actually corporation tax. Barclays provided this information in a letter dated 15th February 2011:

The rest was largely made up of payroll taxes paid by its staff, such as PAYE taxes and national insurance.

Of course stopping banks swindling doesn't mean closing them down. It just means stopping their swindles, leaving the rest of their staff busy paying their PAYE taxes. Unless the banks were to assert that it is only the swindling that keeps them open! Which we don't believe, as most people working in banks provide an important service, and are no more responsible for economic crashes than passengers in a crashed bus are responsible for the recklessness of the over-incentivised bus driver.


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