Monday, February 21, 2011

Tax cheats

Barclays bank is one of the largest banks in the UK. In 2009 it booked profits of £11.6 billion pounds, despite the financial crisis, and paid out £1.5 billion in bonuses. So how much tax did it pay on its enormous profit? Just £113 million - a rate of less than 1%:

Barclays Bank has been forced to admit it paid just £113m in UK corporation tax in 2009 – a year when it rang up a record £11.6bn of profits.

The admission stunned politicians and tax campaigners. It was revealed on the eve of a day of protests planned against the high street banks by activists from UK Uncut, a group set up five months ago to oppose government cuts and corporate tax avoidance.

The Labour MP Chuka Umunna, who lobbied Barclays' chief executive, Bob Diamond, to reveal the tax paid by the bank, described the figure – just 1% of its 2009 profits – as "shocking".

While some of its profits will have come from overseas subsidiaries - many deliberately established in tax havens such as the Cayman Islands and Guernsey precisely to evade tax - this is still tax cheating on a grand scale. The headline company tax rate in the UK is 28%. And Barclay's is pretty obviously not paying its fair share. And the result of that cheating is to rip more than three billion pounds out of the public purse - three billion pounds that could be used to pay for hospitals, schools, and public libraries.

In the UK, people have made the connection between corporate tax evasion and government cuts, and this weekend they retaliated by occupying and shutting down banks. We should look into this in NZ. Are our leading corporates really paying their fair share? In the UK, Barclays' shocking figures emerged from select committee hearings. We should do the same here, and hold a select committee inquiry into corporate tax evasion. Unfortunately, such an inquiry's natural home - the Finance and Expenditure Committee - is tightly controlled by National. And I doubt they would be interested in inquiring too closely into whether their donors and cronies are paying their fair share.