UK Plans to raise £2.5 b with bank levy

Friday, 22 October 2010 03:00 - - {{hitsCtrl.values.hits}}

LONDON (Reuters) Britain said on Thursday it expected to generate around 2.5 billion pounds of annual revenues by 2012-13 via a permanent levy on banks' balance sheets.

The figure was in line with a forecast made when the levy was announced in the budget in June.

The government has now published draft legislation on a levy which will be phased in from January 1, 2011 and is intended to encourage banks to move to less risky funding profiles following the credit crisis.

"We have consulted on the design of the scheme so that it achieves two objectives: firstly, ensuring that banks make a fair contribution in respect of the potential risks they pose to the UK financial system and wider economy," Treasury minister Mark Hoban said in a statement.

"Secondly, the final scheme design incentivises banks to make greater use of more stable financial sources, such as long term debt and equity, working with the grain of our wider reform programme," he added.

Unveiling 80 billion pounds of spending cuts on Wednesday, Chancellor George Osborne ratcheted up the rhetoric on banks, pledging to seek the "maximum sustainable" revenue from the financial sector.

The government said it would work with international partners to explore the merits of a Financial Activities Tax on profits and remuneration.