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  1. Wealth
December 6, 2009

FT: Osborne says banks should not offset losses against tax

By Spear's

Mr Osborne has called for banks to be prevented from offsetting past losses against tax on distributed profits. “When the banks start making profits again, the banks should start paying taxes again,” the shadow chancellor told the BBC on Sunday.

When Alistair Darling stands up to deliver his pre-Budget report on Wednesday, bankers across the country will be listening more carefully than ever, as they are likely to be the target of some of the chancellor’s most headline-grabbing proposals.

While much of the focus has been on whether Mr Darling will impose a windfall tax on bankers’ bonuses, George Osborne, shadow chancellor, has tabled another idea that could cause banks just as much concern.

Mr Osborne has called for banks to be prevented from offsetting past losses against tax on distributed profits. “When the banks start making profits again, the banks should start paying taxes again,” the shadow chancellor told the BBC on Sunday.

Several banks suffered colossal losses last year, such as the record £24.1bn deficit at Royal Bank of Scotland, so their potential to offset future profits could exempt them from paying billions of pounds in tax for many years.

Mr Osborne’s proposal to restrict this fiscal benefit for banks – an idea that Mr Darling is believed to have shied away from – could generate much more income for a future Tory government than Mr Darling’s potential windfall tax on banking bonuses.

However, the shadow chancellor’s plan has attracted scorn from the banks. “We would not want to see banks treated in tax proposals in any other way than any other business,” said the British Bankers’ Association.

To read the full story, visit ft.com

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