Banks don't want a red tape Brexit bonfire, but lower taxes would sweeten the deal

Hayley Kirton
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City Of London At Hub Of World Finance
Recent research has discovered banks' collective tax bill has sprung up to £34.2bn a year (Source: Getty)

Banks are calling on the government to slash taxes for the sector to sweeten the deal for Brexit and ensure the country remains competitive.

Research carried out for the British Bankers' Association (BBA), which was published in November, revealed banks' collective tax bill had shot up to £34.2bn for the year to March 2016, up 3.6 per cent compared with £33bn in 2015 and 9.3 per cent compared with £31.3bn in 2014.

The sector has been slapped with additional taxes, such as the banking levy and the banking surcharge, in the aftermath of the financial crisis.

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Now, Anthony Browne, the BBA's chief exec, has told the Financial Times this vast array of charges for the sector will make the UK less attractive for financial institutions following Brexit.

"We understand the government's need to close the fiscal black hole, but if you want to become more attractive as a global financial centre then having a range of bank-specific taxes is not a good way to go about it," Browne said.

However, the City seems less keen on a total cull of red tape.

Read more: Deutsche Bank has slashed its bonus pool by 77 per cent

"There is absolutely no appetite for a regulatory bonfire," Miles Celic, chief executive of think tank TheCityUK, is quoted as saying in the same article.

However, John McFarlane, chair of both Barclays and TheCityUK, added: "There needs to be a tangible, compelling economic or collateral reason to be here or to do business here, rather than somewhere else, and this needs to be renewed continually."

A number of voices across the financial sector have warned Brexit could spell the end to various valuable rights currently enjoyed by the industry, such as passporting.

Read more: Goldman Sachs chief executive Lloyd Blankfein's pay fell to $22m in 2016

It was revealed earlier this month the BBA is working on plans to lobby notable names across the EU27, in a bid to persuade them a Brexit deal which maintains the UK financial sector's ties with the European system would be in everybody's best interests.

Meanwhile, TheCityUK is reported to have commissioned a Vision 2025 report, which will look at how the position of the UK's financial services industry can be strengthened following Brexit.

The news comes less than a fortnight before Prime Minister Theresa May is due to trigger Article 50, and get the ball rolling on the UK's formal departure from the EU.

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