Bloomberg News

Osborne Increases Bank-Levy Rate, Keeps 2.5 Billion-Pound Target

November 29, 2011

Nov. 29 (Bloomberg) -- The U.K.’s bank levy is being raised for a second time to ensure the Treasury raises 2.5 billion pounds ($3.9 billion) annually, Chancellor of the Exchequer George Osborne said.

The rate will increase the levy to 0.088 percent starting on Jan. 1, Osborne said in his end-of-year statement to the House of Commons today.

British lenders have shrunk their balance sheets, meaning forecast tax revenues have also contracted. Eight months ago, the government raised the levy rate for next year to offset a planned cut in corporation tax. At the time, Osborne said he would increase the rate to 0.078 percent from January. Corporation tax will be reduced by 2 percentage points in April and will be cut by 1 percentage point in each of the following three years, offsetting some of the impact for British companies, banks included.

“The banks are committed to playing their part in restoring the public finances through the many different taxes they pay,” British Bankers’ Association Chief Executive Officer Angela Knight said in an e-mailed statement today. “But a stable tax regime is important: banks of all nationalities do business around the world from here and they pay tax here. Certainty is an important requirement.”

--Editors: Francis Harris, Jon Menon

To contact the reporter on this story: Howard Mustoe in London at hmustoe@bloomberg.net.

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net


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