Friday 6 March 2009

Banks and Taxes

We have heard a lot of hype about how banks are taking taxpayers money to cover their mistakes - impressive soundbites from politicians mainly. Just to be awkward, from 2004 - 2008, Lloyds paid £9.4billion in tax, HSBC (which has not taken any government handouts) paid c. £16billion (not only, I suspect, to the UK government, but to others as well), Barclays paid £7.2billion and RBS paid £9.4billion (source, FT Online).

Small sums, I suppose, compared with the bailouts that RBS, Lloyds and HBOS have received, but don't forget their contributions in terms of sponsorship (the Barclays Premier League, the RBS 6-Nations and sponsorship of F1 racing, HSBC and Golf, etc). The banks have poured money into sport and other community ventures, which generate spin-offs for others in the form of jobs, taxes to the government, and boosts to the local economy and enjoyment.

Oh yes, they also employed a lot of people, and paid them salaries (which were taxed), bonuses (ditto - and these were even defended by the Prime Minister in 2007as he didn't want to see his tax base eroded), the dividends on their shares were taxed, and for a while they did provide the much-needed grease for the economy. When times were good, noone complained, indeed banks were almost encouraged to lend more and were supervised less. Yes, it is bad that they now have to be saved with taxpayers money, but in the end, banks have paid tax as well as generating other taxable income which has been poured into government coffers. Let us not forget.

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