Do The Government Hierarchy View Bank Charges As An Indirect Tax?

**renegotiation** · 18th June 2008 10:41

A few months ago I began to wonder why I had never heard top government officials say anything critical on bank charges in the media, let alone do anything about it. I recently formed the view that it could be because of the revenue it generated. I'm not sure exactly how much revenue bank charges generate for the banks and what cut the governemt gets of bank profits, but i'm sure it must be a substantial sum. A nice little tax on the poorer people in society. I know the banks reckon they will just claw back the profits elsewhere, but I don't thnk it will be that easy for them. They wouldn't be putting such a fight up otherwise would they? Also, the government wouldn't find it easy to replace the revenue lost from an indirect tax would they? Admittedly, I am using the term indirect tax loosely. Now I know there's no great conspiracy going on here, but does anyone think there is any substance in what I am saying? Does anyone know how much the government rakes in on bank charges in a year out of bank profits? Let's not forget there could be the double whammy of paying back all the old charges, as well as losing a future regular income. It could be a couple of lean years for the government coffers if the banks lose the test case.

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**skbuncks** · 18th June 2008 12:15

I also wonder, if the banks are forced to pay back all the charges they have levied over the years whether they will be able to claim the tax back they paid on them from HMRC. I'm sure this would not make the Brown & Darling money making [problem] particularly unhappy.

skb

**gni03349** · 18th June 2008 13:45

The govt would only get their cut in the form of tax. Banks are not owned by the govt (except Northern Rock icon

maybe lol), so I don't see how you can say its a tax. Tax goes to the state... bank profits go to the shareholders.

**skbuncks** · 18th June 2008 14:21

Yes but banks pay corporation tax on all profits, currently running at 28%. So on the 4.5 billion pound they made on bank charges alone last year they would have paid 1.3 billion in tax, quite a little earner for the state dont you think?

**gni03349** · 18th June 2008 15:05

I don't disagree, but then all companies are nice little earners for the govt. Of course, the more profit, the more tax goes to the treasury.

Fuel is the best earner (irrespective of price per litre, or price per unit), as duty is paid on it, and then further tax on the profits of selling it. Then you have cigs and booze with duty too...

**skbuncks** · 18th June 2008 16:03

Ahh, but the difference is the lawfulness of the tax generated. If it is shown that bank charges are unlawful then the profits generated from them are also unlawful. It therefore follows that the government is benefitting directly from an unlawful practice. This is perhaps a compelling reason why they remain tight lipped on the subject.
Obviously the high tax on fuel is there to help save the planet and the high tax on booze and fags to save our health. Nothing at all to do with profiteering...

Of course the treasury needs to raise revenue which is then spent wisely to the benefit of everyone. I shudder to think what stealth taxes would be put in place if they ever had to make up a shortfall resulting from mis-management and overspending

**renegotiation** · 19th June 2008 08:44

I don't see either of the opposition parties using scrapping bank charges as a vote winner. Something isn't right here. It's disgusting.

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