All UK banks must sign tax avoidance code - Osborne

Sunday, 17 October 2010 23:15 -     - {{hitsCtrl.values.hits}}

LONDON (Reuters) - The government will require all banks to sign up to a code of practice by November in an attempt to make them pay more tax at a time of tight public spending, Chancellor George Osborne said on Sunday.

The Conservative minister said only four of the 15 major British banks have signed the code, set up last year by the former Labour government to try to deter tax avoidance schemes.

“We are going to be looking at the code of practice that the banks were supposed to sign up to make them good taxpayers,” he told BBC television.

“I am going to be requiring by November that all the banks sign up to the thing that the last government said they were going to be signed up to and pay what is due.”

Former Chancellor Alistair Darling published the code of practice last year to ensure that banks complied “not just with the letter, but with the spirit of the law.”

It followed media reports of banks using elaborate, but legal, international schemes to avoid paying hundreds of millions of pounds to the British government. Osborne will set out on Wednesday how the government will cut spending by 83 billion pounds over the next four years in an austerity package it hopes will secure the economic recovery. Most government departments will have their budgets cut by an average of 25 percent over four years.

Osborne said the banks would have to play their part in boosting the state’s finances as voters face cuts to welfare payments and public services. “I completely understand people’s anger on this. We have introduced a permanent bank levy and I will be publishing the legislation on that next week,” he said.

Osborne aims to reduce a record peacetime budget deficit of 11 percent of GDP to just over 2 percent in five years. Britain’s government owns large stakes in Lloyds and RBS, which together with Barclays and HSBC dominate the country’s banking landscape.