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Balancing the regulation and taxation of banking

Sajid Chaudhry, Andrew Mullineux, Natasha Agarwal

International Review of Financial Analysis, Volume: 42, Pages: 38 - 52

Swansea University Author: Sajid Chaudhry

DOI (Published version): 10.1016/j.irfa.2015.01.020

Abstract

This study gives an overview of bank taxation as an alternative to prudential reg- ulations or non-revenue taxation. We review existing bank taxation with a view to eliminating distortions in the tax system, which have incentivized banks to engage in risky activities in the past. We furthermore anal...

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Published in: International Review of Financial Analysis
Published: 2015
URI: https://cronfa.swan.ac.uk/Record/cronfa21875
first_indexed 2015-06-02T02:09:26Z
last_indexed 2018-02-09T04:59:47Z
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spelling 2016-09-08T12:37:35.4573239 v2 21875 2015-06-01 Balancing the regulation and taxation of banking 7738ea30b6a22ee7676e5b15e1c42ebb Sajid Chaudhry Sajid Chaudhry true false 2015-06-01 CBAE This study gives an overview of bank taxation as an alternative to prudential reg- ulations or non-revenue taxation. We review existing bank taxation with a view to eliminating distortions in the tax system, which have incentivized banks to engage in risky activities in the past. We furthermore analyze taxation of financial instruments, trading and taxation of banking products and services and their ability to finance res- olution mechanisms for banks to ensure their stability. In this respect, we put forward the following arguments: (1) that a financial transaction tax is economically inefficient and potentially costly for the economy and may not protect taxpayers; (2) that a bank levy used to finance deposit guarantee and bank resolution mechanisms is potentially useful for financial stability, but that it poses the threat of double taxation, together with the proposed Basel-III liquidity ratios; and (3) that we support the elimination of exemption from value added tax (VAT) for financial services in order to provide banks with a level playing field, whilst retaining exemption for basic payments services. This is expected to improve efficiency by reducing the wasteful use of financial services. Journal Article International Review of Financial Analysis 42 38 52 Banks; Taxation; Regulation; Too Big To Fail Banks. 31 12 2015 2015-12-31 10.1016/j.irfa.2015.01.020 COLLEGE NANME Management School COLLEGE CODE CBAE Swansea University 2016-09-08T12:37:35.4573239 2015-06-01T16:35:12.9316456 Faculty of Humanities and Social Sciences School of Management - Accounting and Finance Sajid Chaudhry 1 Andrew Mullineux 2 Natasha Agarwal 3 0021875-64201580326AM.pdf Balancing__the__regulation__and__taxation__of__banking.pdf 2015-06-04T08:03:26.4600000 Output 338318 application/pdf Author's Original true 2015-04-06T00:00:00.0000000 true
title Balancing the regulation and taxation of banking
spellingShingle Balancing the regulation and taxation of banking
Sajid Chaudhry
title_short Balancing the regulation and taxation of banking
title_full Balancing the regulation and taxation of banking
title_fullStr Balancing the regulation and taxation of banking
title_full_unstemmed Balancing the regulation and taxation of banking
title_sort Balancing the regulation and taxation of banking
author_id_str_mv 7738ea30b6a22ee7676e5b15e1c42ebb
author_id_fullname_str_mv 7738ea30b6a22ee7676e5b15e1c42ebb_***_Sajid Chaudhry
author Sajid Chaudhry
author2 Sajid Chaudhry
Andrew Mullineux
Natasha Agarwal
format Journal article
container_title International Review of Financial Analysis
container_volume 42
container_start_page 38
publishDate 2015
institution Swansea University
doi_str_mv 10.1016/j.irfa.2015.01.020
college_str Faculty of Humanities and Social Sciences
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hierarchy_top_id facultyofhumanitiesandsocialsciences
hierarchy_top_title Faculty of Humanities and Social Sciences
hierarchy_parent_id facultyofhumanitiesandsocialsciences
hierarchy_parent_title Faculty of Humanities and Social Sciences
department_str School of Management - Accounting and Finance{{{_:::_}}}Faculty of Humanities and Social Sciences{{{_:::_}}}School of Management - Accounting and Finance
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description This study gives an overview of bank taxation as an alternative to prudential reg- ulations or non-revenue taxation. We review existing bank taxation with a view to eliminating distortions in the tax system, which have incentivized banks to engage in risky activities in the past. We furthermore analyze taxation of financial instruments, trading and taxation of banking products and services and their ability to finance res- olution mechanisms for banks to ensure their stability. In this respect, we put forward the following arguments: (1) that a financial transaction tax is economically inefficient and potentially costly for the economy and may not protect taxpayers; (2) that a bank levy used to finance deposit guarantee and bank resolution mechanisms is potentially useful for financial stability, but that it poses the threat of double taxation, together with the proposed Basel-III liquidity ratios; and (3) that we support the elimination of exemption from value added tax (VAT) for financial services in order to provide banks with a level playing field, whilst retaining exemption for basic payments services. This is expected to improve efficiency by reducing the wasteful use of financial services.
published_date 2015-12-31T14:35:53Z
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