LONDON, Dec 19 (Reuters) - Financial services firms paid 63 billion pounds ($102 billion) tax in Britain in the 2011/12 financial year, according to a report, with a bank levy and higher personal income taxes making up for a fall in corporate tax.
The tax take for the year to March 2012 was in line with 2010/11, the report by accountancy firm PricewaterhouseCoopers found.
“What has happened as profits have dipped and the government’s policy has flowed through in terms of cutting corporation tax but raising other taxes, is that the balance of tax has changed but the overall amount of tax has remained roughly the same,” PwC tax partner Alex Henderson told Reuters.
Financial services have long been a crucial key source of tax revenue for Britain, where the industry makes up about 10 percent of the economy.
A slowdown in activity this year, as the euro zone crisis bit, has hit earnings and sparked job cuts, raising fears that a shrunken sector would hurt national finances at a time of big spending cuts.
Europe’s finance sector has been the target of tougher regulations, including on pay, since the 2008 financial crisis that caused many banks to be bailed out with state aid, including several in Britain.
The bank levy, introduced as an annual charge by the British government in 2011, raised 1.6 billion pounds from the first three quarterly payments in 2011/12, according to PwC.
The Treasury said earlier this month the levy would raise 1.8 billion pounds in 2011/12. The levy is set to increase in January, with the Treasury estimating the tax will raise 2.8 billion pounds in 2013/14.
Corporation tax paid by City firms, meanwhile, fell a quarter to 5.4 billion pounds, the report found.
The government is under pressure to crack down on big companies operating in Britain after investigations into the tax practices of international groups such as coffee chain Starbucks .
VAT sales tax and national insurance contributions also helped swell government coffers. They are now the two heaviest burdens on the finance sector, accounting for almost 60 percent of the taxes borne, according to figures extrapolated from data supplied by 39 financial services.
The 63 billion pounds tax paid in 2011/12 represented 11.6 percent of the government’s total tax intake, down from 12.1 percent the year before.
“The sector remains a major contributor to the UK’s total tax take despite the Eurozone crisis and regulatory reforms impacting on the profitability of the banks, in particular,” said Mark Boleat of the City of London Corporation - the local authority covering much of London’s main business district, which commissioned the survey.