Banks set to pay lower taxes than UK con­sumers

The Pak Banker - - Front Page -

LONDON: Con­sumers could soon be pay­ing a higher tax rate than the UK's biggest banks, fol­low­ing changes to cor­po­ra­tion tax and VAT in 2011, ac­cord­ing to the Trades Union Congress. The TUC says the tax changes mean UK con­sumers will start to feel the pinch from 4 Jan­uary, when VAT rises from 17.5 per cent to 20 per cent.

Cor­po­ra­tion tax is set to fall from 28 per cent to 27 per cent in April. But the TUC has cal­cu­lated that the ef­fec­tive cor­po­ra­tion tax rate for large multi­na­tional com­pa­nies - the head­line rate mi­nus the "var­i­ous tax loop­holes they are able to ex­ploit to bring down their tax bill" - fell to 21 per cent in 2009. Ac­count­ing for a 0.5 per cent fall in this ef­fec­tive rate ev­ery year since 2000, ac­cord­ing to the TUC, the cor­po­ra­tion tax of big com­pa­nies with op­er­a­tions in mul­ti­ple coun­tries could be as low as 19 per cent in 2011. The move­ment of cor­po­ra­tion tax and VAT in op­po­site di­rec- tions will "fur­ther skew" the UK tax sys­tem in favour of high-profit in­dus­tries, such as bank­ing, over small and medium-sized en­ter­prises, which the union said would will be "hit hard" by the VAT rise at a time when banks were "re­fus­ing" to lend to them.

Bren­dan Bar­ber, the TUC gen­eral sec­re­tary, said: "Shop­pers look­ing for bar­gains in the Jan­uary sales will soon be pay­ing more to clear the debts racked up by the banks when they plunged the UK into re­ces­sion and asked for a multi-tril­lion pound bailout." The TUC said the VAT rise would hit the poor­est fifth of house­holds harder, as they spent twice as much of their in­come on items sub­ject to VAT. "Peo­ple will not happy to learn that banks have man­aged to earn them­selves a tidy tax cut as a re­ward for their fail­ure while the rest of us suf­fer from job losses, tax hikes and the wreck­ing of pub­lic ser­vices," Mr Bar­ber said. -PB News

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