Taxing the banks
Quite a lot of people ask me why doesn’t the government take more money off the banks? Well today the coalition government did just that, imposing an extra £800 million levy on them this year, on top of the £1.7 billion already announced.
The government will now set a bank levy of £2.5 billion every year. If the banks continue to return to profitability then there must be scope for increasing the levy later in the Parliament. This is a new charge, the last government declined to take money off the banks in this way. Maybe it will stop the bleating of Labour MPs that the levy this year was set to bring in less than the net £2.3 billion brought in by Chancellor Darling’s one off super tax on bonuses last year. I doubt it!
The levy is the start of what I hope will develop into a broader “Robin Hood Tax”. The government has confirmed that it is looking at a Financial Activities Tax, FAT. We will have to wait until the outcome of the Vickers Commission review of the banking sector before pursuing this any further.
Meanwhile, I guess we’ll have our views on how to utilise the extra £800m. Personally, I think funding an adequate replacement for EMA and continuing support for debt advice and financial inclusion would be good candidates.