Nice piece of outrage on the main TUC website today – though not yet on its ToUChstone blog – that the banks are to gain around £19bn from offsetting losses incurred during the crisis against future profits.
It’s a well-established principle of corporation tax that losses can be offset against profits – but this is a different situation. Financial institutions caused this crisis and bailing them out has loaded plenty on to national debts, not only in the UK but globally; while economic stimulation packages leading on from banking failures, preventing economic freezing, have done the same. Banks have also, in several cases, been taken over by the state.
In this week of the announcement of the precise scale of the cuts envisaged by the ConDem government, this is a well-timed reminder by the TUC not only of what caused the crisis but also what might play a more important role in overcoming it – i.e. a greater attention to the tax regime, to whit: greater tax fairness. As regards financial institutions, a financial transactions tax would also go some way towards establishing financial responsibility for the crisis – in the continuing absence of which in the UK such further financial gains for the banks are simply amazing.
As the TUC points out, £19bn would go a long way towards ameliorating some of the cuts being proposed, including the switch of the basis of indexation of benefits from RPI to CPI, and on benefits generally. Furthermore, the direction of effective taxation among the banks, together with proposed corporation tax cuts, is likely to take the rate paid by banks, and other large companies guided by financial advisers, well below that of small companies.