International curbs on banks

24 March 2010

The one-off banking bonus tax has raised £2 billion, the chancellor Alistair Darling revealed in his 2010 Budget as he reiterated support for a global levy on the banking sector.
This 50% tax on bonuses of more than £25,000 paid between December and April raised significantly more than £550 million originally forecast.
The cash will go towards funding a £2.5 billion initiative to help small businesses and boost workers’ skill levels in the UK. 
The big four UK banks have forked out more than £650 million in bonus tax - but they could well face further payments if plans for a global banking tax come to fruition.
“More countries now agree on the need for an international systemic tax on banks,” Darling said as he called for the levy to be brought forward.

“I agree with all those who think that such a tax should be internationally co-ordinated. Going it alone would costs thousands of jobs, not just in London, but across the country,” he warned.

However, the chancellor acknowledged that the success of the financial services sector is essential for the future of the UK as much as the global economy.

The British Bankers’ Association branded the chancellor’s speech as a “Budget with an eye on the ballot box.”

"The financial services industry already pays £24 billion annually in tax," the organisation says.

"We know only too well that taxing the banks will bring short-term popularity but the question that the Treasury is failing to answer is what all their additional rules and now this tax will mean for the price that people and businesses will pay for their loans and their mortgages."

In further efforts to boost the flow of cash from banks to businesses and consumers, Darling announced plans to up the lending targets for state-owned Lloyds and Royal Bank of Scotland.

He says the pair will lend £94 billion in the coming financial year of which half will be lent to small and medium-sized businesses. Lloyds and RBS lent £38 billion to SMEs last year.

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