Treasury sets bank levy higher than expected
Bank levy will be charged at 0.05% rather than the expected 0.04%, rising to 0.075% in 2012
THE TREASURY has been forced to raise the tax rate on risky assets higher than expected as it struggles to hit its £2.5bn target from a banking levy.
The levy, which applies to wholesale liabilities over £20bn, will now be charged initially at 0.05% instead of the expected 0.04%. This will rise to 0.075% in 2012 as the government tries to force banks to hold less risky assets on the balance sheet.
“The government believes that banks should make a full and fair contribution in respect of the potential risks they pose to the UK financial system and wider economy,” said Mark Hoban, financial secretary to the Treasury.
“The levy has been designed to encourage less risky funding and complements the wider agenda to improve regulatory standards and enhance financial stability.”
It is thought that the largest British banks will have to pay out more than £200m each due to the levy