Edited by Sajid Chaudhry and Andrew W Mullineux
The financial crisis has raised serious concerns about the current organisation and operation of the banking sector in the UK. The tax regime that is imposed upon banks and other financial institutions is one place to look for failures that precipitated or exacerbated the crisis, and for tools to improve the functioning of the financial sector in the future. There are many considerations that will influence the design of a tax regime. Here we offer some that are derived from the need to address significant ethical failings in the financial system exposed by the financial crisis. Popular narratives of the crisis highlight some particular areas of concern. One is the level of compensation awarded to employees in the sector. A related concern has been the kinds of activities in which financial institutions have engaged to generate outsized profits and rewards for their employees. In particular, the idea that they have not only engaged in ‘casino banking’ but they have also ‘gambled with other people’s money’, taking risks on the basis that they will reap the rewards if the gamble pays off, but will not bear the costs if it does not. A third concern has been that banks and their employees avoid paying the taxes that they owe.
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