On the 27th March 2013 the tax stream of the FinCris project will run a workshop in Birmingham on ‘taxing banks fairly’. A timetable and outline of the aims of the day are below.
Please contact Gabrielle Kelly (firstname.lastname@example.org) if you wish to attend.
Taxing Banks Fairly Workshop*
Wednesday 27 March 2013
Room G05, University House*,
Business School, University of Birmingham
09:30- 10:00 Coffee with croissants and Registration
10:00 – 13:00 Presentations (with 15 minute coffee break at 11:30)
13:00- 13:30 Buffet Lunch
13:30 – 15:00 Panel Discussion
*University House (Birmingham Business School) is in the Orange Zone, Building 03 (http://www.birmingham.ac.uk/contact/directions/edgbaston-directions.asp)
*This Workshop is part of the AHRC FinCris Project and CHASM’S Taxation Workstream and co-sponsored by the Global Finance Research Network in Birmingham Business School, University of Birmingham
In connection with the interdisciplinary AHRC ‘FinCris’ project (www.fincris.net) being conducted by the Universities of Warwick and Birmingham, we wish to seek views on the appropriateness of bank taxation in the light of the financial crisis and particularly the relationship between regulatory taxes on risk taking (risk related capital adequacy and perhaps deposit insurance premiums and liquidity and funding risk requirements) and revenue raising taxes (special levies, stamp duties and financial transactions taxes, VAT, and CGT, income and corporation taxes) and their appropriateness, especially for banks at the base of leveraging, but perhaps not for SMEs, of the tax expensing of interest on bank debt (and the appropriate treatment of costs of servicing equity financing).
The Mirrlees Review (www.ifs.org.uk) advanced proposals for eliminating inefficient financial transactions taxes and raising the VAT rate to the standard rate (from zero), which the banks would likely welcome given the opportunity to claim VAT on inputs and might reduce inefficient ‘over’ usage of financial services and products (and ‘free banking’, which involves unfair cross subsidisation) and achieve greater consistency and equity.
The UK’s Special Bank Levy (www.hmrc.gov.uk) in part aims to discourage over reliance on wholesale funding, but one of the Basel Committee’s (www.bis.org/bcbs) proposed new liquidity ratios, the Net Stable Funding Ratio (NSFR), aims to do likewise, and so there is thus a risk of double taxation, unless the levy is to be retained to recoup the costs of the implicit insurance by taxpayers of ‘too big to fail’ of ‘systemically important’ banks. If that is the case, the levy should be set at a rate that levels the competitive playing field with smaller potential competitor banks that do not enjoy the implicit subsidy and thus find it more costly to fund themselves. If the big banks were broken up, or through an appropriate resolution regime no longer required implicit taxpayer insurance, then the levy would become redundant once the NSFR was in place.
The unequal and distortionary treatment of capital gains, higher income and profits taxation is another longstanding key issue affecting ‘bankers’ pay’ and incentives, but perhaps a topic for another day.
The Workshop (to be hosted by Birmingham Business School in University House on the main campus (map and directions on website www.birmingham.ac.uk) will aim to gather views form regulatory and tax experts, banking and other practitioners and academics to feed into the project’s research report and to facilitate a frank exchange of views. The Current plan for the day is as follows: Coffee and croissants at 09.30; Presentations by invited speakers between 10.00 and 13.00 (with a coffee break); Buffet lunch 13.00 to 13.30 in the meeting room, followed by a Round Table exchange of views between 13.30 and 15.00 (end).