Chancellor's bank levy to coincide with french and german
measures
Chancellor Osborne has demonstrated his tough stance towards the
financial services industry by introducing a banking levy on bank
balance sheets from January 2011. The rates will initially be
0.04%, rising to 0.07%, which is eventually estimated to raise over
£2 billion a year.
"It should be relatively easy to implement this levy, which
makes banks bear the burden of potential systemic risk," says Dana
Ward, Head of Financial Services Tax at Grant Thornton UK LLP.
"The government perceives Britain as being uniquely exposed to
the risk of bank failure, as the ratio between bank assets and GDP
is far higher in Britain than in other Western countries. It is
good news that France and Germany will join Britain in implementing
a bank levy as this should mean a level playing field between the
UK and its major European counterparts."
"The Chancellor has not introduced a financial activities tax,
which is wise given that it would pose a competitive disadvantage
if Britain were to do it alone."
"Introducing a balance sheet levy will most likely make it
harder for banks to avoid the tax than say a financial activities
tax which could result in banks quickly migrating certain business
functions from the UK or substituting one financial instrument for
another."
"Although the banking industry rejects levies in principle, this
measure is probably less punitive and less disruptive to markets
than a foreign currency transaction tax could have been."
"At the same time, the new levy risks alienating global banks
who could refocus their businesses away from the UK. If the UK is
out of step with other major financial centres in introducing a
levy, then the City of London risks falling behind."
ENDS
For more information please contact:
Alex Wessendorff, press office for Grant Thornton UK LLP, T +44
(0)20 7728 2048, E Alex.Wessendorff@gtuk.com.