Scrap tax relief on top pay: TUC

Brendan BarberUnion leaders have stepped up their attack on bankers' bonuses by claiming that changes to the tax system could raise £1.7 billion a year.

The TUC said corporation tax relief for pay and bonuses worth more than 10 times average earnings should end in the banking and financial services sector.
Stopping relief on earnings more than £262,000 would raise £1.7 billion a year which would pay back the deficit created by the financial crash, said the union organisation.

The TUC complained that banks were reporting big profits again and handing out billions of pounds in bonuses, proving they could "easily afford" a new tax.
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General secretary Brendan Barber said: "Irresponsible banks played the biggest part in causing the crash. But while the rest of us are still paying a heavy price, banks have gone back to business as usual with eye-watering bonuses for their top staff.

"It is only right that they share these with the rest of us, and making the top bonus pool liable for corporation tax means they would pay a little more towards clearing up the mess they made.

"We should not forget they have enjoyed a level of state support no other industry could dream of, including an £850 billion bailout from taxpayers and the Bank of England.

"Scrapping corporation tax relief for earnings over £262,000 will help pay off the deficit and tackle the growing pay divide that has seen a tiny minority of super-rich individuals receive inflation and performance-busting pay rises while everyone else suffers real-terms wage cuts.

"The Chancellor should use his budget to end the privileged status that the financial services sector enjoys at the expense of everyone else by announcing this new tax on excessive pay and bonuses, as well as taking proper steps to reform our failed executive pay culture."

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Scrap tax relief on top pay: TUC

Most recently HM Revenue & Customs let Vodafone off the hook - for quite a sum. Vodafone paid out just £1.25 billion despite an original tax bill being closer to £8 billion (HMRC has always refused to reveal how much it thought the Vodafone final bill was). The episode was made even more shaming and painful because Vodafone was given several years to come good with the cash owed - even though it was sitting on a substantial cash pile at the time.

The Exchequer is estimated to have lost around £10 million to Goldman Sachs recently through an 'error' made by HMRC. The episode relates to an employee benefit trust run by Goldman allowing employees to take non-repayable loans that had no National Insurance contributions tied to them. HMRC did claw back the full amount from more than 20 businesses - but not Goldman. HMRC remains cagey about the details of the deal. Little HMRC accountability or transparency.

Huge problems with QinetiQ, the former Defence Evaluation and Research Agency, or DERA. A lack of clarity on contractual arrangements at the outset didn't help, allowing private equity company Carlyle to hammer the price down (why would you start negotiations when you didn't know the company's true value?). The Ministry of Defence behaved, it was said, like "an innocent at a table of card-sharps". Estimated cost to the taxpayer - £90 million. Huge sums were later made by QinetiQ management when the company listed.

The TaxPayers' Alliances estimates £2.7bn worth of taxpayer cash was wasted with a super-expensive 'National Programme for IT in the NHS'. The Department of Health, in the end, had very little to show for it as a consequence. Another example of poor management and a seemingly ingrained inability to provide taxpayers' with value for money.


"BT is paid £9 million to implement systems at each NHS site, even though the same systems have been purchased for under £2 million by NHS organisations outside the Programme", the Commons Public Accounts Committee noted.

Contentious. The Office for National Statistics estimated this has declined 3.4% since 1997, "with inputs increasing by 38%." The Centre for Economics and Business Research estimate that this inefficiency costs the taxpayer £58.4 billion a year.

Given the above record, are there any deals that the taxpayer has actually won out on? Not many, but the one successful project was the roll out of new Jobcentre Plus offices. It came in £314 million under budget, claims the Taxpayers' Alliance. A small cheer.

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