Those looking for retribution from big banks for their role in wrecking the world economy will be heartened by a report out of London today (Dec. 4). In Britain, home to some of the world’s most toxic, scandal-ridden banks, the financial industry is back to paying nearly as much tax as it did before crash. According to PricewaterhouseCoopers, which crunched the numbers for the City of London Corporation, the UK finance industry paid £66.5 ($100 billion) in tax in the year to March, just under the high-water mark set in 2007.
This isn’t because the industry is back on its feet—far from it. The tax paid on profits remains some 40% below what it was in 2007. But not making as much money—or any money, if you’re RBS—is no excuse to cut your tax bill. For every £1 that finance firms pay in corporation tax, they are now hit with around £4 in other charges; back in 2007, every £1 in corporation tax was accompanied by £1.50 in other levies.
What’s changed? Most significantly, a special levy on balance sheets was introduced in 2011 to force banks to make “a full and fair contribution in respect of the potential risks they pose on the wider economy.” This tax raised £2.7 billion in the latest financial year. Several other European countries impose similar charges on their banks (pdf), but attempts to introduce something akin to this in the US have stalled (paywall).
And the UK isn’t letting up, introducing a special 8% surcharge on banking profits next year, in addition to stricter limits on the amount of losses that banks can carry forward to offset taxes due.