Finance: Banks to pay 'maximum revenues' without being forced abroad
Published 21/10/2010 | 02:48
Chancellor George Osborne yesterday talked tough on banking – but did not go beyond the relatively painless package of measures that had already been well trailed.
He pledged to reap "the maximum sustainable revenues" that can be gleaned from Britain's banks without forcing them abroad. Amid threats – both veiled and overt – from some of the biggest UK-based banks to quit Britain because of the rising burden of tax and regulation, Mr Osborne insisted he would not let banks off "from making their fair contribution". But he added: "Nor do we want to drive them abroad. Many hundreds of thousands of jobs across the whole United Kingdom depend on Britain being a competitive place for financial services."
As a result, the Government will today publish details of its banking levy, which he said would ensure rising revenues for the taxpayer over the coming years. He also reiterated his plan to force banks to sign up to a "Code of Practice on Taxation" in a bid to curb tax evasion. Just four of 15 voluntarily put their names to the previous government's code.
Reaction to his plans has been mixed among experts, with some foreign-owned banks already putting their presence in the UK "under review" and howls of anguish from the City. There were more yesterday.
Matthew Barling, a financial services tax partner at PricewaterhouseCoopers, took the measured approach, saying: "The competitiveness issues are now clearly on the Government's agenda.
"But whether their views on the right balance between further taxation of the banking sector and preserving a competitive environment for banks to do business in the UK, are shared by the banks themselves remains to be seen."
Simon Denham, the head of the trading firm Capital Spreads, represented the frothing outrage of the City suits unaccustomed to anything but the mildest of criticisms: "Once again, the banks have come in for a hammering. It is rather beyond time to point out that a bank profit of £10 takes as much effort and application of capital as a lawyer or accountant. Taxing one sector at a vastly worse rate than another is both unfair and, in the long run, stupid. There are many countries with equally as good financial reputations as the UK who would be very happy to take our financial business."