Government to raise further £800 million by bank levy

Government will Impose Fresh Levy on Bank's Earnings

Government will Impose Fresh Levy on Bank’s Earnings

The government said it plans to raise another £800 million through levying profits of banks, taking the total amount collectible to £2.5 billion for the year.

The government is expected to announce the new measures in next month’s annual budgets. This will help banks know the context they were operating in, said Chancellor George Osborne.

The government is yet to finalise a deal with banks limiting bonus payouts and increase lending to businesses. Talks on project Merlin halted last month.

Mr. Osborne had originally announced that a new bank levy will come into effect with lower rates in 2011. However, the Chancellor later concluded that the banks are in a better shape than he had thought two months ago while announcing a lower tax regime for 2011.

The coalition government thinks that rather than extending the Labour Party’s policy of taxing bonuses, it is prudent to tax bank’s earnings.

The Labour had managed to £1.7 billion through their bonus levy regime while the one-off tax introduced by Alistair Darling managed to raise £2.3 billion – after adjusting for tax reducing income tax and corporation tax receipts.

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