Financial firms in Britain pay 7.4% more tax, says report

Financial offices in the Canary Wharf in London. The increased tax paid by financial firms was driven by a rise in the levy on banks' balance sheets, a report from the City of London Corp showed.
Financial offices in the Canary Wharf in London. The increased tax paid by financial firms was driven by a rise in the levy on banks' balance sheets, a report from the City of London Corp showed.PHOTO: BLOOMBERG

LONDON • Financial companies in Britain paid £71.4 billion (S$129.3 billion) in tax in the latest fiscal year, 7.4 per cent more than a year earlier, driven by an increase in the levy on banks' balance sheets, a report from the City of London Corp showed.

Banks and insurance firms contributed the lion's share within the sector, which overall accounted for 11.5 per cent of government receipts for the period to March this year, according to the body that governs and lobbies for the financial district.

The City of London has emphasised its contribution to the Treasury in post-Brexit lobbying to bolster the demands of financial companies for tax breaks and a special deal allowing them to continue to sell services in the European Union, known as passporting.

While such measures could help persuade international companies to keep some operations in London, it could be politically unpalatable after banks were bailed out amid the financial crisis.

"As the last set of data on financial services' tax contribution before the Brexit negotiations begin, it is hugely important," said Mr Mark Boleat, the policy chairman at the City of London, in the statement.

"The sector arguably stands most to lose as negotiations loom. It makes it clear the argument that government should be engaging with firms as it approaches talks with the remaining EU 27, and the pulling of the political trigger," he added.

The industry paid £8.4 billion in corporation tax, up from £7.6 billion, said the report produced by PricewaterhouseCoopers for the City of London and based on data from 50 companies.

Banks paid £34.2 billion in total tax, including £3.4 billion from the British bank levy, the report said.

The levy was introduced in 2010 in response to public anger over taxpayer-funded bailouts and was subsequently increased eight times.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on December 07, 2016, with the headline 'Financial firms in Britain pay 7.4% more tax, says report'. Print Edition | Subscribe