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Budget 2010: Banks face levy from January next year

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  • 22/06/2010
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Budget 2010: Banks face levy from January next year
Coalition Chancellor George Osborne refused to wait for global consensus with his announcement of a tax on all larger banks and building societies in the Emergency budget this afternoon.

Individual bank levies will be calculated on tier one capital calculations among other factors and international banks with UK branches will also have to pay the tax.

Smaller banks would be exempt, said Osborne, and the rule change is expected to produce £2bn in revenue a year after its introduction in January 2011.

In his maiden Budget speech, he said: “This was a crisis that started in the banking sector. The failure of those banks has placed a huge loss on the rest of society.”
As a result, he said, banks should carry more of that burden.

In a statement, The BBA said: “The banking industry fully understands the part it must play in helping the UK’s economic recovery. We know this is a difficult Budget for everyone and the banking industry will work to meet its obligations in helping bring the economy back to strength.”

However, the BBA cautioned that keeping a level playing field against the banking sector in other countries was crucial.

“We are a large financial centre and a great many jobs are created here as a result. The industry does business globally but pays its taxes in Britain. The UK is not the only country creating some form of bank levy. So bank levies need to be co-ordinated internationally: they must not prevent the industry in the UK from being able to compete. It is essential that the international banks do not find themselves taxed multiple times for the same thing,” said the BBA.

To see the Chancellor’s speech, click here

 

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