United Kingdom Banks running from taxes

Before we start talking about these British banks that did not paid or did not paid all their taxes, let´s explain first what taxes are.

Tax is a word that comes from the Latin “taxo” meaning rate. Taxes are financial charges upon taxpayers by a state or the functional equivalent of a state. If people fail in paying taxes or evaded them or resist them, this action is usually punished by law. Taxes are also known as the sum of money people have to pay to the government for its support or specific facilities or services, levied upon incomes, property, sales, etc.

united kingdom2There are a few countries were taxes are not charge upon people, the concept simply does not exist. There are other countries were every single citizen has to pay their taxes or the government has the right to take what you owe from your bank account, like in the Unites States and other countries were only people whose incomes reach an specific amount are the ones who pay taxes. In general there is a constant aspect that stays in all countries were you have to pay taxes. People who earn more have to pay more taxes.

Taxes are not a requirement applied just to people. Companies and banks also have to pay taxes according to their incomes. Recently it was discovered that 7 of the most important and known British banks settled in London evaded or did not paid their corresponding taxes in 2014, despite their millions of dollars generated in profits. In short words, is a case of United Kingdom banks running from taxes.

According to an analysis done to several company documents by Reuters, in the last few months, the seven British banks reported a corporation taxes payment that did not exceed 31 million dollars in 2014. This taxes payment is illogic if we see the incomes and profits of these banks. Together they made 31.000 million dollars in the United Kingdom, 5.300 million dollars in profits and they have about 33.000 employees.

The official registers that were presented by the British banks show that seven of them, including Goldman Sachs and UBS AG, used tax excemptions and credit losses created during the bank crisis to reduce their tax payments.

Five of these entities, which include JP Morgan, Bank of America Merrill Lynch, Deutsche Bank AG, Nomura Holding and Morgan Stanley, said that their principal divisions in the United Kingdom did not pay their corporation taxes. This information and investigation has brought the outrage of activists and politicians.

This type of information is available for everyone to see because of the big change in the European rules made in 2013. These rules demand a report, country by country, were you can find the information about profits and a tax break down from the banks.

united kingdom

These documents claim that some of the banks mentioned before did not paid their taxes because they reported some losses in London, but this losses report were being written along with some profits from some small subsidiaries with a more relaxed tax regime.

On the other hand, the British government claims they are working as hard as they can to ensure a fair part of the taxes payment from the multinationals, after the social indignation of knowing that companies like Google and Starbucks got profits from the United Kingdom to avoid the payment of taxes. This came to be known in the last couple of years

The activists and legislators said that after receiving so much support during the crisis, it is a mistake that the Banks can operate with almost no taxes payment.

These activities perform by the British banks named above generate a lot of distrust because they are evading there taxes payments and like they generate such huge amounts of profits, their taxes are important for the government to develop different projects, improve, create or change services for the population and the country, like health care, education, transport, and more.

They also are used for the public work that includes roads, street lighting, street benches and other things. It also helps to distribute the incomes in a more equitable way through transferences and subsidies. The transferences are given to specific people or to companies in order to help them produce and the subsidies are government interventions where the market prices are lowered, most likely by intervening in the production costs.

For example, if you bake cakes in an electric oven and the electricity costs are very high your cakes are going to be very expensive but if the government lowers the electricity prices you won´t have to pay so much many and your production costs will be lower, so, your cake will not be that expensive.

This is why taxes are so important and if they are not paid correctly it could affect the developing of a country just for the irresponsibility of the ones with more power and money.

Add a Comment

Your email address will not be published. Required fields are marked *