As you know that taxes are higher in the UK when a country’s money supply is created by banks. This is so that taxpayers don’t have to foot the bill for bank-caused financial crises and because banks receive the proceeds from the creation of new money instead of the taxpayer

1. THE PROFITS FROM MONEY-MAKING

Paper currency, such as £10 notes, is still printed by the Bank of England. The government makes money on every single bank note it publishes because it only costs a few cents to print a £10 note. This profit on newly produced money totalled £18 billion between 2000 and 2009, which was enough to pay the wages of about 90,000 nurses throughout that time.

However, the Bank of England only produces paper currency; banks are responsible for producing the electronic currency that we also use every day. Banks are the ones who profit when money is created; neither the government nor the taxpayers do.

Banks raised the amount of money in the UK by £1 trillion through lending between 2002 and 2009. (with every new loan creating new money). Since banks made this money, they are the ones who gain from it (in this example, through interest on an additional $1 trillion in loans).

Taxpayers could have paid up to £1 trillion less in taxes if the government had created this money rather than the banks, or almost £33,000 less in taxes for every person who pays income tax over just seven years. [1]

2 Interest rates on the national debt.

The government must borrow far bigger sums of money to make up for this lost revenue because the banks currently receive the profits from the creation of money instead of the government.

The interest on all of this money that the government has borrowed must be paid by the taxpayers. Currently, we spend £51 billion annually more on interest on the national debt than we do on either defence, law enforcement, or transportation (including the road system). Each income taxpayer will pay £1,700 in interest expenses annually. [2]

With less money available to provide public services due to increased interest payments on the nation’s debt, taxes will increase without providing any further benefits.

3. DEFICIT: CRISES AND RECESSIONS COST

When the 2008 financial crisis struck, thousands of individuals lost their jobs, consumers cut back on their spending, and business sales decreased. As a result of fewer people working and smaller corporate profits, the government was able to collect much less tax revenue.

Additionally, more people began receiving unemployment benefits, which resulted in a large increase in the government’s expenses. The difference between tax revenue and expenditures increased dramatically from £30 billion to £180 billion. The ‘deficit’ consists of this hole, which has to be filled with borrowed funds.

We wouldn’t have these crises and wouldn’t need to utilise taxpayer funds to save banks if our financial system didn’t print money each time it made a loan. If you need any kind of accounting-related help you may can get in touch with us at any time, our expert accountants will help you to solve your issues.