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Tax rise or tax cut?

Nick Robinson | 12:56 UK time, Tuesday, 8 February 2011

Labour claim that even after today's announcement of a tax rise on the banks that the Treasury will be raising less from the banks than they were last year.

They even quote the Treasury's own figures to make their point. The levy, they say, will bring in £1.9bn in 2011/12 compared to £3.5bn in 2010/11 from the bonus tax.

The Treasury has two responses to that:

First, they say that the £3.5bn figure takes no account of the loss of corporation tax and income tax. The net figure, they say, is £2.3bn.

Secondly, they say that since, unlike most businesses, banks' balance sheets apply to a calendar year - not April to April - the chancellor's £2.5bn applies to the year 2011.

Comments

Page 1 of 2

  • Comment number 1.

    I find myself completely underwhelmed and dont know who to believe. If anyone.

  • Comment number 2.

    Why are we cutting taxes on the banks? Makes no sense.

  • Comment number 3.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 4.

    We're being had - the real story is this from George Mnobiot's Guardian yesterday that reveals that an obscure change in corporation tax rules reveals that the banks WILL ESCAPE PAYING ANY CORPORATION TAX:

    "While Cameron insists that he occupies the centre ground of British politics, that he shares our burdens and feels our pain, he has quietly been plotting with banks and businesses to engineer the greatest transfer of wealth from the poor and middle to the ultra-rich that this country has seen in a century."

    The noise around today's announcement is a blantant attempt to distract us from what is a coup d'etat that is going on behind the scenes. The Tories are joined at rhe hip to the City - they are effectively the Bankers' Party and this outrageous tax stitch up b ehind the scenes should be shouted from the rooftops.

  • Comment number 5.

    Exactly what contribution are Labour making to British politics at the moment? Very little in my opinion.

    If they argue against every tax change or cut then what is their solution - they can then explain why after 13 years they didn't put any of it into effect.

    They should tell the truth - if they don't want ANY cuts then taxes will have to rise (as we all know just borrowing more is no longer an option).

    Deny cuts,avoid talking tax rises - The Labour Partywhat is the point of it??

  • Comment number 6.

    Due to other tax changes, the Banks and other large corporations will be paying less and not more tax, and utilising tax havens to ensure less tax is paid. see http://bit.ly/ijUQLd

  • Comment number 7.

    as usuall labour cannot do basic arithmetic

  • Comment number 8.

    The Government's figures probably don't take account of income tax because they know that most of it would be dodged anyway.

  • Comment number 9.


    £800m is only about 10% of what they are planning to pay themselves in BONUSES this year Nick. And I'm sure they will find imaginitive ways of recovering this lost money.

    Never mind a £2.5bn levy, what about a £7bn levy. i.e. 100% of their undeserved bonuses.

  • Comment number 10.

    Osborne really has missed a trick here, coming up with something that can be construed as a tax CUT both for the banks and the bankers within. It's like he's learnt absolutely nothing. How can a policy of rewarding the architects of our economic crisis be the right one? Gift for Ed Balls too, so not as if even the politics of it is smart.

  • Comment number 11.

    Isn't it fascinating how, although Labour can give us no detail at all on what unpopular cuts they would make , they can give chapter and verse on populist tax rises. Funny that

  • Comment number 12.

    How many jobs in the private sector does a cut of £800 million equate to?

  • Comment number 13.

    Nick,

    I thought that announcements about taxation involving a billion here and there always had a political motive? that's what you said in your last blog.

    Saga @2

    I suspect most things about tax make no sense to you.

  • Comment number 14.

    Wow such a huge amount of money - NOT. The banks should be made to pay for the near financial collapse of this country.

    800 million is peanuts to these guys.

  • Comment number 15.

    Nick

    On tax rises, I'd have thought that you'd have been more concerned about the two stealth income tax increases on their way from April 6 for those earning over £115k. Going to cost you £480 a year. I mean, inconceivable that you won't be affected. Unless you have a very good tax advisor.

  • Comment number 16.

    I'll try again.

    Why is this posting doing the job of the Treasury in providing a defence against anticipated attacks from Labour. Surely the purpose of thos blog is to examine politics - in this case: what does the announcements give Osborne politically? Was this more to do with politics than economics? Was it announced today because Osborne has to go up against Balls at the dispatch box? etc.

  • Comment number 17.

    it's high time Her Majesty's Loyal Opposition realised they have no say in this.

    What is the point of arguing with a bunch of agenda driven lefties?

    We've had multiculturalism - failed; the equality agenda - failed; the social justice agenda - failed. These peopel want to haev a sya in how the banks are managed or taxed? Having granted a peerage who caused the biggest bank bust worldwide.

    Do they not get the message from the sales of Gordon Brown's book on the subject - managing a triumphant 11500 copies so far. No one is interested in the left. They have no solutions; only agendas.

    This is not the way to sort out the banks and their tax.

    Leave it to the professionals. or the 'Tory-led government' as I believe we are being encouraged to call it by the boy who won a trip to Afghanistan.

    It's grim up north London...

  • Comment number 18.

    More? Less?

    Presumably the actual figure could still go up or down as the banks go back to their old ways and/or the economy continues to collapse.

    Frankly it's trivia as it does not address the key issues such as ...

    Recovering the >1tn the banks cost the disunited kingdom and most importantly ending the way in which the tax payer provides free underwriting for their risks.

  • Comment number 19.

    4#

    Thats the third time you've posted that missive from that publicity seeking self-hating tory attention grabber and its still not news and still not accurate.

    I dont recall you being up in arms about the likes of GMG themselves not paying corporation tax, or News International, SmithKlineBeecham, British Airways (now they've decamped to Madrid) or any other of the big guys... all of which happened over the last 13 years.

    And yet suddenly, today, thanks to a dodgy piece in the Grauniad, here you are waving your walking stick at the front of the Outrage bus, determined to be in the pound seats.

    Today of all days. Given the noise you're making about it, what are you hoping that we dont notice elsewhere?

  • Comment number 20.

    Idiotic, old-fashioned, tactical rather than strategic posturing on every single issue. The coalition seems determined to drag us all back into the late 80s, economic crisis and all.

    Interesting article on another BBC page:
    http://www.bbc.co.uk/news/uk-12378565

    Also read this blog entry:
    http://sturdyblog.wordpress.com

    I really thought this country had moved beyond this. For the last two decades we have been told that everything was moving more to the centre. It seems that any move to the centre was more apparent than real. The Tories basically said the things they needed to say to get elected and now seem to be pursuing Thatcherite right-wing policies. Did you see IDS's announcement about marriage? We are most certainly NOT in it together.

  • Comment number 21.

    6#

    You too. Monbiot is just another self publicist who resents his tory parents and has never grown up. He's not even been taken seriously by the very groups he's purported to support.

    Mans a joke.

  • Comment number 22.

    "4. At 1:19pm on 08 Feb 2011, richard bunning wrote:
    We're being had - the real story is this from George Mnobiot's Guardian yesterday"

    Oh grief, not you as well.

    Monbiot hasn't got a clue what he's talking about. This move will align the tax treatment of branches with the CURRENT tax treatment of subsidiaries. Why is this a good idea? Because of the tax treatment of overseas dividends received by UK companies which changed in 2009 (note the time, hardly a Tory plot) which can now be received free of UK tax.

    Did Monbiot write a hysterical article in 2009 screaming that changes in the taxation of dividends meant that UK companies wouldn't pay UK tax on the profits of foreign subsidiaries when they repatriated them to the UK? No he did not. Now the exact same traetment is to be afforded to branches and suddenly it's the tax crime of the century. I think not.

  • Comment number 23.

    I do get the impression that the 'conversations' we are currently having about banks and big business are merely a sideshow for public consumption and that all the important decisions are being made well out of sight.

    As long as you keep the propaganda simple and the reality difficult the general public simply wont be able to understand what is really going on.

  • Comment number 24.

    Labour still hasn't got a coherent set of policies to present so anything that they say at the moment is empty rehtoric.

    The more important issue is bankers bonuses. It will clearly be obscene in the current economic climate if anyone in the bank's senior management teams get large cash hand-outs this year.

  • Comment number 25.

    #4 Richard Bunning wrote:
    "The noise around today's announcement is a blantant attempt to distract us from what is a coup d'etat that is going on behind the scenes."

    The change to the taxation of foreign branches of UK multinationals was presented in a UK Treasury discussion document (27 July 2010), and detailed proposals were published on 29 November 2010.

    The accusation that the Government has made its announcement today in a response to a Guardian article is ridiculous (it's more likely to have been made ahead of today's Parliamentary debate).

    Others, more qualified than I, have pointed out the flaws in the Guardian article (here and on the CIF website).

    I see no reason why tax on the profits made by non-UK entities outside the UK should be charged UK corporation tax. Of course dividends paid to UK residents are liable to UK income tax.

    The change is largely modelled on the OECD Model Tax Convention.

    If you consult the UK Treasury (rather than 'The Guardian' and 'Private Eye') you will find a full description of the change, including various restrictions to protect the UK tax take, for example, "restrictions [that] will prevent abuse whereby profits that would otherwise remain within the charge to CT are diverted to an exempt foreign branch".

  • Comment number 26.

    Evidently there may be up to a million people who are marching on march 26th to let Mr Cameron, Mr Osborne and Mr Clegg know how they feel about one of the most appalling times in British political history. It Will definitely go down in the history books as how ignorant, arrogant, exploitative, unethical and destructive the city is in regard to banking and how ordinary folk and communities are again being completely mugged.

  • Comment number 27.

    Tax rises, tax cuts?

    I'd have thought that of more concern to anyone earning over £115k were the two stealth income tax rises on their way from April 6. Going to cost an extra £480 in tax. Will there be a blog on this, I wonder?

  • Comment number 28.

    RR7 wrote:

    What is the point of arguing with a bunch of agenda driven lefties?


    >>

    Sounding more and more rattled, Robin.

  • Comment number 29.

    Have people seen the Guardian article by George Monbiot about how Cameron and Osborne are conniving to give a giant tax break to the banks and big business? Seems a little odd since less tax revenue to the Exchequer will increase the deficit, will lead to more spending cuts than we're having to suffer already. Very very clowny.

  • Comment number 30.

    17. rock-gonzo-robin wrote.......
    Do they not get the message from the sales of Gordon Brown's book on the subject - managing a triumphant 11500 copies so far. No one is interested in the left. They have no solutions; only agendas.

    ------------------------------------------------

    Forgetting opinion or political loyalties. The following proves beyond any doubt whatsoever that what you have written is factually complete and utter rubbish (as usual)

    1. Labour party membership is up and increasing all the time. Reports suggest 10,000 have joined since the coalition govt was formed.
    2. All the opinion polls show labour ahead.

    And last but not least............
    3. At the last general election, eight million, six hundred and nine thousand, five hundred and twenty seven people voted labour.

  • Comment number 31.

    "Evidently there may be up to a million people who are marching on march 26th to let Mr Cameron, Mr Osborne and Mr Clegg know how they feel about one of the most appalling times in British political history."

    What, the thirteen year rule of New Liebour??? I'll pencil it into my diary....

  • Comment number 32.

    22#

    The scraps of red meat that the Grauniad is flinging around has really got the useful idiots stirred up, hasnt it Andy?

  • Comment number 33.

    28#

    If "rattled" in leftyspeak means "exasperated" in normal English, then you may be onto something.

  • Comment number 34.

    From Davos, EU, all political parties around the world and various Think Tanks the consensus is to maintain the status quo on banks with the flimsy reason that no new bank crisis has happened...yet. But the problem with this is is that no remdial action has taken place. Nothing has been fixed.

    Meanwhile the future commodity markets are all betting on higher food prices and what remedial action is being taken by our esteemed world leaders? Yup, nothing. We are simply sleepwalking into the next crisis as our political elite have neither the will, integrity or guts to take on their paymasters - banks and ultimately the mega rich (who are not household names thanks to a subservient media).

  • Comment number 35.

    "26. At 2:42pm on 08 Feb 2011, lefty11 wrote:
    Evidently there may be up to a million people who are marching on march 26th to let Mr Cameron, Mr Osborne and Mr Clegg know how they feel about one of the most appalling times in British political history."

    remembering, of course, that "up to a million" includes the number 2.

    "One of the most appalling times in British political history"? Even by your hysterical standards that's hilarious. Where do you put it then, in the top 5 most appalling times? The top 10? The top 100?

  • Comment number 36.

    32 - Too true, Fubar. I'm guessing in an earlier time this rabble would have been burning old ladies after some charlatan 'proved' the existence of witches by showing them a wart on his backside.

  • Comment number 37.

    Sagamix @ 29

    I haven't seen that but will definitely check it out. Thanks. Monbiot is a fine campaigning journalist with an eye for the major issues and an admirable willingness to rock the boat. No wonder he is reviled by the UR!

  • Comment number 38.

    lefty...

    and labour donors are doing what?

    Withdrawing their funding, my good man. Goodbye funding, goodbye party.

    Opinion polls are irrelevant - except the one that says the economy is not to be trusted to Ed Balls.

    It's grim up north London...

  • Comment number 39.

    pdavies...

    The only thing I enjoy rattling is your cage...


    and that of the newlabour apologists...


    it's grim up north London...

  • Comment number 40.

    "1. Labour party membership is up and increasing all the time. Reports suggest 10,000 have joined since the coalition govt was formed."

    Most of them on Harriet's "buy one get one free" drive to disaffected sopping wet lefty liberals who couldnt accept that being in a coalition despite finishing in 3rd place meant making comprimises. What do you expect when you sell memberships for a quid a go and then try and sell tickets at a fundraiser for 1000 pounds per table?

    "2. All the opinion polls show labour ahead."
    As is to be expected from this bunch of meat-headed voters who can barely remember yesterday, let alone the last 13 years. And they're ahead by what though, three points? Is that all? Despite the skies being about to fall in, the seas about to overcome the land and the beasts of the land about to devour the lambs of God, they can only manage a three point lead?

    "And last but not least............
    3. At the last general election, eight million, six hundred and nine thousand, five hundred and twenty seven people voted labour."

    Yeah. Mainly because their dads and their grandads always did or because they are part of the client state who cant bear to have the golden teat ripped away from their chops.

    And you know what?

    They still lost 90 seats.

  • Comment number 41.

    32 Fubar saunders

    The thing with the Grauiad story: Can you believe that HMRC would be competent enough to achieve this? I seriously doubt it.

  • Comment number 42.

    Guardian readers you have to love them, when they are in power its still the Tories fault apparently, or the devious bankers. Simple fact is it happened on labour's watch their fault 100%. To be patronised by labour MPs or Guardian readers (the home of the cycle path manager jobs section) about managing the defecit they created, quite honestly is pathetic.

  • Comment number 43.

    "This move will align the tax treatment of branches with the CURRENT tax treatment of subsidiaries." - andy @ 22

    No doubt.
    But will it (or won't it) lead to companies paying less tax?
    In your opinion.

  • Comment number 44.

    Let's get serious. The govt ought to hit the banks with a £10bn
    levy.The money can go straight to reducing the National Debt.
    It won't change the bankers' lifestyles a jot. Just do it.

  • Comment number 45.

    31. At 3:11pm on 08 Feb 2011, Fubar_Saunders wrote:

    What, the thirteen year rule of New Liebour??? I'll pencil it into my diary....
    ----------------------------
    Great. Have a note book ready. A very large notebook. And write down how many anti tory/banker posters you see. Then make a note of how many anti labour posters you see. You just need your big toe for that count fubar, if that.
    ps. Lloyds just sent another 200 low ranking staff to the dole queue. Thats a total of 26200 since we bailed them out. And of course at the top end, bankers, chief exec etc...its bonus time again. Millions and millions and millions of pounds in reward for failure and a middle finger to the taxpayer.
    Absolutely revolting.

  • Comment number 46.

    #37 pd65 wrote:
    "Monbiot is a fine campaigning journalist with an eye for the major issues and an admirable willingness to rock the boat."

    I'm sure he's a good read if you are of a left-wing disposition, and prefer fanatasy to fact (see my #25 or, even better, the UK Treasury).

  • Comment number 47.

    What is the matter with you today, Robin? Falling between two stools, almost like you can't decide between style-over-substance and substance-over-style. Why not pack a pipe and retire to the study, have a quiet half an hour with Monbiot?

  • Comment number 48.

    The rather silly right-wingers who post here are so filled with hate and negativity that they might be wise to seek help, or at least drink a couple of litres of bromide, before they explode.

  • Comment number 49.


    39.

    lefty...

    and labour donors are doing what?

    Withdrawing their funding, my good man. Goodbye funding, goodbye party.

    ---------------------------------
    All I can tell you for sure is what is happening in my area. Yep the party is broke. But new members are turning up at meetings. Using their own printers for leaflets and going doorstepping. You see, there may not be ethical rules about party funding, but you cant stop working class people from fighting against the monster that is conservative ideology and fighting against the negative affects of its policies on the poor and most vulnerable.
    Every party needs money, but the labour party at its grass roots is about people. And there, it is getting stonger.
    I know you wont understand.

  • Comment number 50.

    40. fubar
    your digressing opinion against my facts in reply to robin :-)

  • Comment number 51.

    What's all this about Monbiot's article? Read it this morning but didn't make a huge impression. But what with Andy rubbishing it and Fubar fulminating fit to burst, am beginning to think there can be no smoke without fire. Are we closing loopholes or just making them larger and clearer in case anyone missed them the first time round? Difficult to know what to think.

  • Comment number 52.

    "And last but not least............
    3. At the last general election, eight million, six hundred and nine thousand, five hundred and twenty seven people voted labour."

    Yeah. Mainly because their dads and their grandads always did....."
    ---------------------------------------------------------------
    As it happens my dad and granddad voted Tory despite being low paid labourers. Me? I got a Grammar School education. Never voted Tory. That's what happens when you educate people. They get all ungrateful or clued up as some of us like to think.

  • Comment number 53.

    This type of thing happens periodically and always results in the same venomous outrage.

    Firstly, the banks employ thousands of people and pay billions in tax. At a time when we are paying £120 million *a day* in interest alone on the sovereign debt every penny counts and every job counts. Wild taxation and bank bashing is less than helpful.

    Secondly, directors of any company (including banks) are beholden to their shareholders (yes - that's your pension too). They are legally obliged to act in the best interests of those shareholders and if that means retaining top talent then that's what they should do. If it also means that they don't lend to small businesses with bad prospects and no competitive advantage then thats also a decision to be made on merit rather than political expediancy.

    Thirdly, before we bash the banks for reckless lending let us not forget that a principle factor in the recession was the collapse of the housing bubble which resulted in a sea of unknown bad debt in the form of mortgage backed securities. We may well blame the institutions for coming up with such a vacuous financial vehicle but there would have been no bad debt if people had not borrowed beyond their means to pay back. If you have 4 pints in the bar do you expect the bartender to tell you that a 5th might be a bad idea or should you be able to make the decision yourself ?
    A little personal responsibility from all of us before we start slinging the mud.

    Finally, we are invested heavily in the banking sector and should be making some decent return on that investment if and when the banks return to stability and profitability. Slamming the banks with taxation in a fit of pique only threatens our own investment. Why take the pain without the gain ?

    If we are going to impose rules and taxation on the banking sector it needs to be a collective and global effort made to prevent this happening again rather than a punitive measure made to appease misguided public sentiment.

  • Comment number 54.

    Why doesn't the government ask Vodafone for the £6 or 7 Billion it didn't pay in tax and the £1.5 avoided by Philip Green? Absolutely disgusting that the old, disabled and least well off have to suffer cuts to pensions, services and benefits to facilitate the greed of the scum that pass themselves off as business people.

  • Comment number 55.

    Our political system protects and enriches a fantastically wealthy elite, much of whose money is, as a result of their interesting tax and transfer arrangements, in effect stolen from poorer countries, and poorer citizens of their own countries. Ours is a semi-criminal money-laundering economy, legitimised by the pomp of the lord mayor's show and multiple layers of defence in government. Politically irrelevant, economically invisible, the rest of us inhabit the margins of the system. Governments ensure that we are thrown enough scraps to keep us quiet, while the ultra-rich get on with the serious business of looting the global economy and crushing attempts to hold them to account.
    See the full article here: http://www.guardian.co.uk/commentisfree/2011/feb/07/tax-city-heist-of-century

  • Comment number 56.

    "54 - At 4:59pm on 08 Feb 2011, moreram wrote:
    Why doesn't the government ask Vodafone for the £6 or 7 Billion it didn't pay in tax and the £1.5 avoided by Philip Green?"

    Probably becuse the £6bn is an urban myth which HMRC deny (and I see you've inflated it now to £7bn) and because it isn't Philip Green who owns the shares on which the dividend I presume you are referring to was paid, it's his wife and she lives abroad. Now, if you want to chase around the world trying to tax everyone who doesn't live in the UK, good luck to you. Besides as I'm sure you know (please read that in the most sarcastic way you can), dividends are paid out of post tax income so those profits from which the dividend was paid had already suffered tax, albeit corporation tax.

  • Comment number 57.

    Re: Tamilyrn

    Although I agree with your argument that we shouldn't engage in unjustified 'bank bashing', I feel that a lot of what is demanded is perfectly justifible.

    Yes banks employee thousands of people but so does the Columbian drug trade. Just because an industry provides jobs and tax revenue doesn't mean that it is above reproach in it's activities, especially when they have a disasterous effect on the economy. If they are operating in a way which simply creates huge profits for it's staff and directors whilst at the same time underminding the countries financial basis then it is right for the government to intervene.

    To suggest that it's the borrowers fault for the crisis is ridiculous. Yes people should be personally responsible for their own financial loses, however it is the banks responsibility to ensure that it's own lending is sustainable. To use your analogy, if a pub goes out of business because people don't pay their bar tabs then it's the landlords fault for allowing them in the first place.

    The main point is that there is a lot in the banking industry that needs to be regulated. And once done this should drive down their profits enough to ensure that they no longer make unnecessarily large payments to staff. At the end of the day all these institutions are doing is managing the people's finances, they are not directly creating wealth and as such should never be the focal point of an economy.

  • Comment number 58.

    Banks will only pass this tax onto the general public........at least Dick Turpin wore a mask.

  • Comment number 59.

    Royle Blue @ heinz

    Indeed. The fiscal take is all well and good but if the post-tax remuneration of an industry - and its participants - is in excess of its contribution to real wealth creation in the economy, then it's a Net Impoverisher (of those outside the magic circle). Such is almost certainly the case with the banks; a failed sector requiring radical overhaul.

  • Comment number 60.

    I'm getting very bored of the oft-repeated and slightly dangerous principle that a lack of alternative ideas removes the right to criticise the existing one. I doubt many members of the public have quietly formulated a detailed manifesto on fiscal regulation and public spending; does this mean they should keep quiet about taxes and cuts until they have done so...?

    By all means criticise Labour's failure to properly regulate the banks and tax evasion during their tenure, but saying that the Opposition Party (whatever political hue they may be) shouldn't criticise government policy is slightly ridiculous.

  • Comment number 61.

    If you really want to know what`s what read The Big Short: Inside the Doomsday Machine by Michael Lewis. Although hard going sometimes it exposes this industry for what it is, full of corrupt stupid people.

  • Comment number 62.

    54. moreram wrote:

    Why doesn't the government ask Vodafone for the £6 or 7 Billion it didn't pay in tax and the £1.5 avoided by Philip Green?
    =============================================================

    Philip Green avoided £1.5 ? Wow ! And what are Vodaphone doing with Philip Green's £1.5 ???? Every little helps I suppose .....

  • Comment number 63.

    This article from The Guardian puts this whole political debate in a rather different light.

    If this is true (seems very plausible sadly)it is dynamite and the BBC must surely pick up this story and put it in the mainstream.

    http://www.guardian.co.uk/commentisfree/2011/feb/07/tax-city-heist-of-century

  • Comment number 64.

    Labour's bonus tax was a one-off levy. They may say that they would have implemented it again this year, but that easy is to say when you are in opposition.

    Osborne's tax will raise £2.5 billion every year.

    If you can't see which one will raise more money you are either mentally challenged or Ed Balls.

  • Comment number 65.

    @royleblue :

    You make a good point but I think we will have to agree to disagree.

    At the end of the day supply is generated from demand and rampant consumer demand is what leads to bad debt. I do not accept that people should take no responsibility for their own finances. You can - and do - argue a good case that the banks are implicit but it's inescapable that reckless lending and reckless borrowing are intertwined and it's wrong to point the finger at one with consideration of the other.

    Regulation of the banks is only a partial solution. Ironically, it seems the political will at the moment is to encourage more lending to business and homeowners. The banks - with some justification - claim that loose lending practise is what they were being blamed for in 2008 and that all they are doing now is applying stricter criteria to lending to avoid a repeat performance further down the line.

    I fully accept that the banks made terrible investment decisions in search of profit and that they did not have sufficient capital to cover the risk they engaged in. That is squarely their fault and there is no excuse on the capitalisation ratios - it just needs to be fixed.

    The credit culture in britain and the desire for instant gratification however is fundamentally ours. If we live within our means and (gasp) save for things before buying then just maybe we will be able to persuade our government to do the same.

  • Comment number 66.

    Are you defending the indefensible Nick? The banks are paying more than £5 billion in bonuses to their top people, on top of their annual salaries for behaviour that has brought the country to its knees. The Governemnt is taking billions from the needy, children, families, public services, health services, roads, schools, libraries, increasing tuition fees three fold (at least), selling off our coatal services, breaking down care for carers, reducing council services, cutting benefits to the most vulnerable, as well as selling off our forests amongst other things and they think that a mere £800m is going to suffice in the light of the above. They're having a laugh, belly laughing all the way to the bank to serve their own interests.

    The government is too close to the greedy boys and girls in the City and their buddies in the banks and big corporations. Their poultry pittance of an offering is obscene when compared with what the ordinary man and woman in the street are paying. No respect, no trust, no empathy, that's how I feel for the present government, and they deserve no more.

  • Comment number 67.

    Apologies - I conclude by agreeing completely with your argument on limiting the damage a single industry can do to the wider economy. I believe it should be done by enforcing capitalisation limits but that is detail.

  • Comment number 68.

    Read the Guardian Nick,

    To us, it's an obscure shift of tax law. To the City, it's the heist of the centuryIn David Cameron we have a leader whose job is to quietly legitimise a semi-criminal, money-laundering economy

    This is the heading. What's going on? Surely you should be on top of this or are your Tory roots hitting home?

  • Comment number 69.

    Read the Guardian Nick. Here's the heading to look for.

    To us, it's an obscure shift of tax law. To the City, it's the heist of the centuryIn David Cameron we have a leader whose job is to quietly legitimise a semi-criminal, money-laundering economy

  • Comment number 70.

    #64 not to mention that pitching a lower annual levy than the higher one off means that it is less of a disincentive for the banks to remain here year on year. love them or loathe them, they still generate 25% of the nation's GDP for an astonishingly small number of people.

  • Comment number 71.

    Nick, in my view coverage if this issue is yet another example of the dumbing down of BBC journalism.

    Osborne claims one thing, Balls claims the opposite - and you simply repeat what they say and ask the audience what it means.

    That is not good enough. We need you to interpret what they say and tell us which are the facts, which are the lies.

    Quite frankly, I find myself these days watching Al Jazeera News coverage rather than that of the BBC, because the analysis is better. I can only assume that you and other BBC journalists are increasingly being managed by producers and editors who wouldn't know quality if it leaped up and bit them.

  • Comment number 72.

    with stock markets back to pre may 2008 levels its obvious where the bailout money went....the financial oligarchy have conned the tax payers out of money and exported jobs away simple and made up the budget cuts to con even more money out of us ie 1970's standard of living with 2011 prices in everything we buy and give in in tax breaks to big business and big too big to fail banks...this is facism at its worst built of capitalism at its worst

    people of the western world time to stop spending on material things discover who and what you are as a person.

    i for one will be going to london on 26th march

    i want political and social change and the end of parliamnet the end of the monarchy and my country back

    anyone else ready for the long slog

    the onl ysolution the millfrauedued banks i

  • Comment number 73.

    Two things to bear in mind. When we had the bankers over a barrel in 2008 Labour extracted no promises on bonuses as they could have done then and even gave Fred the Shred a golden goodbye! The bonus levy they introduced in 2009 was even said by Darling to be a one off as those wiley bankers would find ways around it if it became a yearly tax. Labour had no plans to increase taxes on banks when in power and all the rest is political posturing. Anyone still listening to them needs their head examining.

  • Comment number 74.

    Rubbishing George Monbiot when there has been no denial, no rebuttal and no comment from the Treasury or any other government spokesman after yesterday's Guradian piece is telling.

    Obviously Monbiot timed the piece to tie in with today's Commons exchanges - obviously Osborne timed his breech of parliamentary protocol which calls for all major policy statements to be made in the Commons not on R4 @ 0735 am this morning so that he would be seen to be tough on the banks ahead of his exchange with Ed Balls this afternoon.

    The coalition BIS Secretary Vince Cable was clearly primed and lined up to do breakfast TV in support of Osborne, so the government news management process is clear to see.

    Either Monbiot is wrong or there is a serious snow job going on here - I'd look to Newsnight to provide a serious and objective assessment of Monbiot's interpretation of the changes in corporation tax.

    If he is right and corporation tax can now be deemed to be voluntary for the banks, then we are looking at a massive abuse of power that would warrant impeachment of the coalition leadership and the rapid fall of the government.
    abl
    If he is wrong, then there is still the issue of what impact this will have in the long term on offshoring jobs.

    Either way, Monbiot's argument is a valuable assessment of the wider bank tax issue that deserves proper consideration.

  • Comment number 75.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 76.

    43. At 3:57pm on 08 Feb 2011, sagamix wrote:

    "This move will align the tax treatment of branches with the CURRENT tax treatment of subsidiaries." - andy @ 22

    No doubt.
    But will it (or won't it) lead to companies paying less tax?
    In your opinion.


    There's no doubt, many large businesses and corporations will end up paying less corporation tax due to the changes and then the cut in corporation tax from 28% to 24% for 2014 will potentially save them even more. On his blog he has all the references for the changes so you can look them up for yourself though it does get a bit complicated.

  • Comment number 77.

    1. As HMG owns 80% of RBS why does it not appoint a director who demands an ESM as needed and there vetoes all bonus payments until HMG becomes a minority shareholder?

    2.Does HMG insist all Companies that win government contracts bank only with the State-owned banks? It should.

    3. Why doesn't the government tax all bonuses at a sliding scale related to the banker's salary? i.e £1m salary employee getting a £1m bonus is taxed at 100%. That would stop the short-term profit mentality of the banks by raising their fixed cost overhead - and show us which bankers really are worth their salary; as the Chairman of RBS recently admitted, most are wildly overpaid.

  • Comment number 78.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 79.

    The statement that 'Banks will loose their best staff to companies abroad' is a red herring. People who live and work in London will not leave as where else in the world is their such comfortable living and as many places where one can spend serious money. The Restaurants, the Theatres and the Shops are better in London than anywhere else. New York may be a little more exciting but it does not feel as safe as London. At the end of the day London feels much more like the centre of the World.

  • Comment number 80.

    freda @ 76

    Yes, I will, one to get to the bottom of. Certainly seemed to cause a flutter amongst the tory terribles on here.

  • Comment number 81.

    # 76. Freda Peeple wrote:

    "There's no doubt, many large businesses and corporations will end up paying less corporation tax due to the changes and then the cut in corporation tax from 28% to 24% for 2014 will potentially save them even more."

    Tax is about raising revenue, not punishing business. Generally, lower corporate tax regimes encourage business and have a history of actually increasing tax revenue though resultant growth.
    Simplification and enforcing consistency in approaches to taxation should in fact eventually make avoidance / evasion much more difficult as it reduces the scope for tax planning to exploit loopholes - provided there is a will to do this and to deal with the countries that profit from facilitating evasion.

    Its interesting to see the increase in the bank levy being portrayed as a reduction from a one off bonus tax. Surely a supposedly one off tax leaves an underlying base line of zero and any replacement tax is an increase; and an increase in any replacement tax is surely then an increase on what had previously been planned???

    ..but still we're back to the populist bash a banker mantra; people prefer to focus on scapegoats rather than looking at and accepting responsibility for the wider causes of our economic decline.
    The crash (not sound bite simplistic "credit crunch") was a direct result of the bubble economics and policies of the decade or two preceding it.
    Quite simply we feel we deserve more than we earn in a global market; and mortgage the future on the never never to have what we want with no credible plan or prospect of ever really being able to pay for it.

  • Comment number 82.

    I'm concerned Nick too that you never give us anything, never look beyond the quotes you receive from the spin doctors from parliament et al. I am weary of your interpretations and barely conceiled Tory mantra. We deserve someone with a bit more umph and courage to give us the truth about what's going on rather than repeating and interpreting what the rich and powerful want us to know, but I suspect you're got an interest in that too. Powerful City, powerful banks, powerful people. In your support of Osborne, you're nailing your colours to the mask.

    Read the Guardian - see extract below:

    Our political system protects and enriches a fantastically wealthy elite, much of whose money is, as a result of their interesting tax and transfer arrangements, in effect stolen from poorer countries, and poorer citizens of their own countries. Ours is a semi-criminal money-laundering economy, legitimised by the pomp of the lord mayor's show and multiple layers of defence in government. Politically irrelevant, economically invisible, the rest of us inhabit the margins of the system. Governments ensure that we are thrown enough scraps to keep us quiet, while the ultra-rich get on with the serious business of looting the global economy and crushing attempts to hold them to account

  • Comment number 83.

    OK, in very simple terms, why Monbiot is talking hysterical nonsense.

    When a UK company decides to expand abroad, it has the choice between setting up a seperate new company in the foreign territory or setting up a 'branch' which is still part of the UK company. Say Saga UK Limited has saturated the UK market with nonsense and decides to peddle nonsense in France. It can set up Saga (France) SARL which is a seperate legal entity or it can simply open a shop in France as Saga (UK) Limited, trading in France. As, legally, the SARL company is a seperate entity, profits of the French company will not be taxed in the UK. If Saga (UK) Limited has a branch in France, then the French profits are part of the UK company's profits and so will be taxed in the UK (and credit will be given for any French tax paid).

    Following it so far? Not that complicated?

    The proposed changes will align the branch treatment to the seperate company treatment, that's all. It's also wrapped up in the same kind of anti-avoidance provisions that have operated with subsidiary companies for decades. So, if these new branch rules are really a terrible tax scandal, it's a terrible tax scandal that's been applied to subsidiaries for a lifetime.

    Why ever have a branch then, rather than a seperate company? Often because a new business will lose money and as a branch, those losses would effectively reduce the 'home country' profits. The new rules still allow a company to elect to have the current treatment but it must apply to all it's new overseas businesses, you can't pick and chose or change to suit what's happening in ach new territory.

    Really, it's not that big a deal. If a company currently has a branch and wanted to keep the profits it earned outside the UK, it could simply incorporate the branch. After all, these are not UK profits, they are profits earned in the overseas territory. Outside of the hysterical left, how can it be justified that we in the UK think we have the right to tax profits earned by a business operating in France

    till there's little point explaining all this, the likes of Lefty will feed on the hysterical Grauniad story and no amount of explanation will reduce the frothing at his mouth.

  • Comment number 84.

    "80. At 10:43pm on 08 Feb 2011, sagamix wrote:
    freda @ 76

    Yes, I will, one to get to the bottom of. Certainly seemed to cause a flutter amongst the tory terribles on here."

    No you won't. Even when faced with clear evidence that there's little to get to the bottom of, you'll just mumble some inconsequential throw away line along the lines of "we'll see" and then a week or so later, you'll rsurrect the issue claiming that it proves the coalition are letting companies get away with tax.

    oh and to answer your question about whether companies will pay more or less tax, the answer is that they will pay the RIGHT amount of tax and isn't that something we all want?

  • Comment number 85.

    Come on Nick, you are a better journalist than this, don't fall into a discussion about comparing apples with pears.

    The bonus tax was largely justified by the profit the banks could take out of the QE exercise - the levy has nothing to do with this.

  • Comment number 86.

    @StartAgain writes:

    "If they argue against every tax change or cut then what is their solution - they can then explain why after 13 years they didn't put any of it into effect."

    They didn't need top put a banking levy or bonus tax in place in the last 13 years because until 2008 we didn't have a banking crisis. No doubt you suffer the same collective amnesia about that little event as Osborne, Cameron and Clegg.


  • Comment number 87.

    @AndyC555

    "Outside of the hysterical left, how can it be justified that we in the UK think we have the right to tax profits earned by a business operating in France"

    So the bottom line of your argument is it's all about the "right" (or not) we have in the UK to tax profits of a UK business that has parts of it operating in another country.

    We have a right to decide what how to tax companies based on what is best for the UK tax payer. If companies pay less tax as a result of this change then it is a change for the worse.

    I am no tax expert but I assume the UK tax payer will be worse off as a result or Osborne would be trumpeting this as an example of him making sure businesses do not avoid tax (all in it together...).

    Feel free to explain how this change will increase UK tax revenue to set my mind at rest.

  • Comment number 88.

    Neither.

  • Comment number 89.

    Surely this had nothing to do with the broad sheets commenting on their front pages tomorrow tat the tory party receives 50% of their funding from the city. Was this a case of the chancellor hoping to deflect the anger that most people reading the papers tomorrow will feel. Or does he now find himself in yet another corner and use the excuse but "we're taxing the banks" and making them pay. Ha, ha, ha. What this additional £800million represents is less than 1 percent of what they were given to preventing them excuse the pun going bankrupt. As for project Merlin, Osborne will find some excuse for not implementing it. The banks don't want it and as they are paymasters to the tory party tey probably won't get it. The more one digs for facts about subterfuge, fidling, tax evasion, bank bonuses, and downright lies from our glorious rulers the more we come to realise that the city establishment and their political lapdogs are corrupt from top to bottom. We then have the damn cheek and impertinence sending our Foreign Secretary to tell other countries how to run their affairs. Who does William hague think he his slighty more informed version of Hilary Clinton. get him on the cheapest flight back to the UK, after all were supposed to be cutting costs.

  • Comment number 90.

    87 - "I am no tax expert"

    Quite.

    "So the bottom line of your argument is it's all about the "right" (or not) we have in the UK to tax profits of a UK business that has parts of it operating in another country."

    Yes and if you thought about it for 5 seconds you'd see why. Because every rule WE introduce, could be introduced by other countries in retaliation. If we decided (for example) to tax foreign subsidiaries of UK companies then other countries would start taxing UK subsidiaries of foreign companies. Is that what you want? Do you think France has the right to tax UK business?

    The idea is to create a level playing field that encourages growth & trade. Your point about the UK needing to maximise its tax take as being best for Britain is typical limited left wing thinking. You think the pot is "X" and taxation strategy is all about getting the biggest slice of "X". It shouldn't be. Tax, as part of economic policy should be about getting that pot up to "2X" or "3X"

    The left have never got their heads round the concept that 25% of 200 is more than 40% of 100.

  • Comment number 91.

    Andy C555. Please bear with me...
    I own Dirty Oil / Bank. I set up the company and subisdise it from UK, writing that off against my UK Tax. UK Tax loses out, company gains (as happened in DTAs). Then, I now pay 10% corporate tax, and as I do not want the money stuck in Nigeria / Bolivia wherever, I want it back in the UK to invest in my new venture in Greater Mongolia / wherever. I dont pay any extra tax that I used to have to pay to get the money back into the UK. UK Tax loses out, company gains. I reinvestment in Greater Mongolia, tax deductable against UK tax (as before). so on so forth. Now my business is very big, and so I want one large legal department, accounting department, marketing department etc. These are central services. So now under any DTA you could reduce profit in one place and charge for it in the other. This would be a call based on tax regimes world wide and causes all the apparent fuss of reolocating. Hence you lose UK tax as before, but could you not decide to add the profit in the branch for such services? Run the UK as a cost centre. Then once charged for in the branch, making a nice profit only being taxed at reduced 10% in Bol/wherever, return the money back to the UK, now not having to pay the increase in corporation tax between UK and wherever. That is different from what happened before under DTAs. Now if this is what is proposed, then I would imagine many more businesses would want to set up in the UK, so this is business friendly and will attract alot of highly paid professionals. If it is as you say, then I am not sure how branches or entities used to move money around as easily without attracting tax differentials, nor why a company would prefer to be based in hither or dither.

  • Comment number 92.

    72#

    Started well, but ended up looking like a "room full of Monkeys Typing Shakespeare" excercise, where someone must have wandered in with the PG Tips trolley towards the end of the piece.... shame really, the content was soooooo interesting.....

  • Comment number 93.

    45#

    A good reason to move to Belgium was to escape the brain dead sheep on a chain mouthbreathing idiots, lefty. If I'm anywhere near such a protest, hopefully it will be in the cockpit of an Apache helicopter.

  • Comment number 94.

    "You see, there may not be ethical rules about party funding"

    Michael Levy, The Union Modernisation Fund, David Abrahams... yeah, you can say that again. About as "ethical" as your foreign policy was, mate.

    "..but you cant stop working class people from fighting against the monster that is conservative ideology and fighting against the negative affects of its policies on the poor and most vulnerable."

    Yeah, yeah, whatever. Tell me mate, what do you think they will all say when they realise that Labour not only actually dont like the poor very much (once they've squeezed every last vote out of them), but that they will also abandon them on their sink estates to the extremists of the BNP once they've served their term as useful idiots and been used as cash cows to fund the party and the tax/spend regimes that serve to enrich the honourable PLP members?

    Just as well you spent thirteen years dumbing down the proles education system mate.... you'd hate for them to realise what you've really been doing in the name of social justice, eh?

    "Every party needs money, but the labour party at its grass roots is about people. And there, it is getting stonger.
    I know you wont understand."

    You're right you know, I have not the faintest idea what a "stonger" is. Is it anything like a "stonker"?

    And, I dont doubt that at the grass roots level the party is about people. So it should be. As should any political party of any colour.

    Problem is, given the statist, Fabian, Command & Control nature of Labour, its not the grass roots thats in the driving seat is it? Those in the driving seat are the Islington champagne brigade, the self appointed, self loathing, privately educated elite, the ones that look down their noses at the grass roots, the intellectuals who wouldnt cross the street to even look at you, lest you pollute their airspace. The pigs that are more equal than any other animal.

    One day, you'll all wake up and realise that they all hate you. You're just there to serve a temporary purpose for them. And that is to line their own pockets. They're not of you, by you and for you.

    Every party needs money. True, it does. And, typically of Labour, they need more than anyone else. And they're still skint, verging on bankruptcy, being kept on life support by the unions. What happens at a local level, mirrored at a national one.

    Quelle surprise.

  • Comment number 95.

    "ps. Lloyds just sent another 200 low ranking staff to the dole queue. Thats a total of 26200 since we bailed them out. And of course at the top end, bankers, chief exec etc...its bonus time again. Millions and millions and millions of pounds in reward for failure and a middle finger to the taxpayer. Absolutely revolting."

    You know what lefty, I agree, it is disgusting. There has been lots of information in the public domain about how badly the Lloyds group treat their IT workers over the last 2-3 years. I empathise with those who have been shown the door, truly I do.

    But.

    Who arranged the marraige between Lloyds and the poisoned HBOS rump? Who waived the competition rules? Who waved the big carrot under Eric Daniels nose? Who drew up the terms of UKFI allowing such behaviour under either (as good as) public ownership?

    Now, I'm not saying that the tories havent failed to get a grip of these organisations and havent failed to shake them warmly by the throat and remind them who is boss. They HAVE failed to do that. But, you very conveniently forget that throwing imaginary, newly printed electronic money at a problem and then declaring yourself the saviour of the world is not a substitute for having a real plan. HBOS & Lloyds should NEVER have been merged. HBOS, along with Northern Rock and RBS should have been allowed to go bust. I never have been in favour of the bailout.

    Buzz Lightweight and Pitbull Balls are yanking your chain mate, just like Tony and Gordon did. They're just parroting what you think you want to hear. They're just exploiting your hatred.

    Rise above it. See the clarity of what the big picture is.

  • Comment number 96.

    #74 richard Bunning wrote:
    "If he is right and corporation tax can now be deemed to be voluntary for the banks, then we are looking at a massive abuse of power that would warrant impeachment of the coalition leadership and the rapid fall of the government"

    Several people explained to you yesterday that this is not correct. The intention is to align the tax treatment of foreign branches with foreign subsidiaries, protecting the tax base is a Treasury objective, and yet you still persist in ignoring their arguments. Why don't you read AndyC555's posts at #83 and #89 and say if you agree with them, or if not, why not?

    I also pointed out yesterday that the UK Treasury have published several discussion documents on this subject, and you could read these should you wish to increase your comprehension of the subject. In addition, you can also study the OECD's model for double taxation, compare the UK's approach against this, and come back and explain it all to us. Finally, you could also consult the European Court of Justice, which is also considering double-taxation issues.

  • Comment number 97.

    93. Fubar_Saunders:

    'A good reason to move to Belgium was to escape the brain dead sheep on a chain mouthbreathing idiots, lefty. If I'm anywhere near such a protest, hopefully it will be in the cockpit of an Apache helicopter.'


    Those cockpits are quite small, F_S. ;)

  • Comment number 98.

    btw, has anyone seen that article in the Guardian by George Monbiot.... ?

  • Comment number 99.

    81. At 10:48pm on 08 Feb 2011, Reaper_of_Souls wrote:
    ..........Tax is about raising revenue, not punishing business. Generally, lower corporate tax regimes encourage business and have a history of actually increasing tax revenue though resultant growth.......


    Which is fine provided there is continual growth. Are you saying that the present Government's policies will eliminate boom and bust?

  • Comment number 100.

    This comment was removed because the moderators found it broke the house rules. Explain.

 

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