James Forsyth

Who is copying who on taxing the banks?

Who is copying who on taxing the banks?
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Patrick Hennessy and Louise Amistead have the scoop on the government’s plans to get more tax revenue out of the banks in the Sunday Telegraph. One idea under discussion is that, “Banks could also be forced to pay more corporation tax by curbing the system that allows them to offset their losses against tax over a number of years.”

As I wrote in the politics column the week of Tory conference, Osborne is considering this idea as well:

“I understand that one change being floated is what would be, in effect, a windfall tax on financial institutions. It would be billed as an accountancy rule: any bank that has received state aid cannot write off old losses against tax. Osborne’s office is rightly concerned that banks will try to put their international losses through their London office, with a view to paying no British tax for years or more.

A simple rule outlawing any such manoeuvre — for the banks kept alive by taxpayers, at least — would allow the Exchequer to collect tax at the normal rate.” After I wrote this, I was approached by someone familiar with the discussions about the various bank bailouts who thought that the banks had already agreed to do this. Now, one can’t know for certain if this is the case but one can’t see why this makes the idea so appealing to politicians. They get to do something that appears tough on the banks that the banks have already agreed to.

Written byJames Forsyth

James Forsyth is Political Editor of the Spectator. He is also a columnist in The Sun.

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