The UK government will tax banks’ balance sheets at a higher rate than first proposed, raising almost 9 billion pounds ($14 billion) over the next four years.
Starting January 1, the government will charge 0.05 per cent instead of the 0.04 per cent announced in June, the Treasury said in a statement in London on Thursday. The rate will rise to 0.075 per cent from 2012 rather than 0.07 per cent.
The levy, which will apply to banks with revenue of more than 20 billion pounds, is aimed at raising 2.5 billion pounds a year to help Prime Minister David Cameron narrow the record budget deficit.
The levy seeks to ensure 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 the statement. It also aims to “encourage the banks to make greater use of more stable sources of funding, such as long-term debt and equity, working with the grain of our wider reform program.”
Chancellor of the Exchequer George Osborne vowed in October to “extract the maximum sustainable” revenue from financial- services firms as he seeks to eliminate a deficit forecast to reach 10 per cent of gross domestic product in the fiscal year through March. The levy will affect the global businesses of UK banks and the British-based units of foreign banks.
