Reader's Letter Of The Day

From the FT:

Sir, I was fascinated to read the latest IMF research that estimates the subsidy that Britain’s largest banks still enjoy from implicit government guarantee equates to circa £66bn (1) (“IMF warns on too big to fail”, April 1).

Does this not fly in the face of the general understanding that the only reason for all of us taxpayers to continue this blind support of the highest and most grossly overpaid sector in society was because it provided some £60bn-£80bn (2) a year to the Treasury coffers?

Richard Guthrie, Captain, The Silver Rocket Ship Company, Scarborough, N Yorks.(3)

1) The Bank of England said the value of the guarantee (free insurance) was worth about £100 billion a year.

I'd argue that about three-quarters of banks' profits are the result of a deliberate policy not to collect taxes from the rental value of land, meaning that the banks can collect that rental value as mortgage interest instead.

And then there are actual subsidies, like Funding For Lending where banks can borrow at half a per cent from the government and lend it out again for as much as they can get, or the Help To Buy scheme.

2) The UK financial sector paid some accounting firm to publish a report saying that the UK financial sector paid over about £63 billion in various taxes in 2011-12.

UPDATE: the 'controversial' bank asset tax (0.156% of gross assets) raises about £2 billion a year, in other words, pretty much naff all. We ought to wack that up to 1% or 2% but levy it on UK lending only.

3) This rather splendidly named company isn't as exciting it sounds, according to ukbizdata.com, its main activity is "Security dealing on own account"