Stretching the Love: Barclays paid just 1% in Tax of a record £11.6b profit
UK’s love affair with banks has been a long story
Big provider of jobs and wealth, the finance industry has traditionally been the poster child of post industrial UK. This heroic status goes back a long way. You might remember in the movie Mary Poppins the scene where the admiral asks Mr. Banks “how things are in the banking industry?”, and his smug reply goes something like “credit has never been stronger, and the British Pound is the envy of the world!”
In recent history from Thatcher to Brown, all Governments have been eager to answer positively to the many desires of this key sector. Deregulation was the tip of the iceberg. Tax bargaining was also quietly conducted, as it should be for what was often akin to straight blackmail: The Government had no desire to look like they were giving in, and Big Banks also had their PR agenda to manage. You might remember the threat from Goldman Sachs to leave the UK in response to the project of implementing a special tax on bonuses. “If you tax me, I’ll dump you” was pretty much the essence of the conversation.
The Crown’s Jewels are Priceless
When the financial crisis was at its peak, few in the UK questioned the imperious need for public support to the Too-Big-Too-Fail banking industry. In other words, when the house is burning is not the time to quibble about how much water you use to fight the fire.
But together with the weariness following the long Blair era, the crisis changed the deal. New Labour’s ruling terminated pitifully and Conservatives finally got back to business, albeit with a coalition.
As per the previous Thatcher era, cuts in public spending are the Tories’ answer. Maggie’s spirit is enjoying a revival, and not just in the movies…
“Zombie Economics” – Don’t miss this most excellent book from Australian Economist John Quiggin
These cuts now happen to be the biggest ever made in peace time with 490,000 public jobs terminated, among other drastic measures.
Her Majesty’ subjects are now taking on the streets like the barbaric continental plebe!
Facing the prospect of a lasting ‘flat growth’ (note the political euphemism) her Majesty’s subjects are starting to lose their legendary composure, and are vilifying cuts, tax dodgers and banks. In a classic act of double dipping, those banks which took the bail-out money during the crisis are now missing out on the collective fiscal effort thanks to their mastery in ‘tax optimisation’ (note the corporate euphemism).
An angry mob is now picketing banks all over Great Britain.
Things started with the shocking disclosure of the British bank bonuses, which were a few miles removed from the expected temperance and common decency.
Then taxes paid by Barclays came under parliamentary scrutiny. The findings are outrageous to most Brits: Barclays Bank actually paid just 1% (£113m) in Corporation Tax of a record £11.6bn of profits in 2009. Even more cynically, most of that 1% amount are income tax and national insurance paid by employees, which the banks hand over on their behalf. In other words it did not even come from the Bank’s benefits.
Shame is not a four letter word. As George Monbiot explains here on his blog, claims made by The Prime Minister and the Chancellor of the Exchequer to tame the banks are not followed by tangible outcomes. “They never meant to address the economic polarisation of this country, or to check the incentives which caused the last crash.”
“Testing the Love”, “Stretching the Friendhsip”… call it whatever you want, there is no doubt that following the action at http://www.ukuncut.org.uk will give interesting insights into modern Britannia’s love affair with the City.
{ From our European correspondent: NKN }
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(update)
Barclays has now been joined by Lloyds Banking Group which will not pay corporation tax until profits hit £15bn:
“Lloyds, which is 41% owned by the state, is able to avoid corporation tax as it has billions of pounds of deferred losses that it can write off against tax liabilities.”
Maybe time to review the relevance and mechanics of some accounting standards?
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8348764/Lloyds-will-not-pay-corporation-tax-until-profits-hit-15bn.html