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Growth and jobs at risk due to excessive bank taxes, warns City

‘PUNITIVE’ AND UNPREDICTABLE taxes borne by the banking sector are risking jobs and growth, a report produced by PwC and the British Bankers Association warns.

An estimated £31.3bn was paid into the public coffers last year by banks, with about £15.3bn paid by UK-headquartered banks and £16bn by foreign-based banks, making up 5.5% of government receipts.

The report adds that the contribution from irrecoverable VAT is larger than corporation tax and bank levy put together, and says that employment taxes make up more than half of the contribution. Corporation tax is only 11.4% of total taxes borne – for every £1 of corporation tax paid, there is £7.80 in other taxes.

According to the report, the UK’s six largest banks – HSBC, Barclays, Lloyds, Royal Bank of Scotland, Santander UK and Standard Chartered – paid 55% more this year than they did at the start of the last parliament.

Writing in City AM, chief executive of the British Bankers Association Anthony Browne described the burden as “punitive”.

He wrote: “One the face of it, this all looks like good news. After all, everyone agrees that banks should pay more than their fair share to finance public services. But this increased contribution has been driven by tax hikes rather than a return to pre-recession levels of profitability. We are now at a tipping point.

“Tax uncertainty jeopardises the sector’s international competitiveness, and threatens the ability of banks to best serve their customers as well as support growth across the country.”

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