Belfast Telegraph

Lib Dems: Banks should pay the price to help eliminate deficit

By Joe Churcher

Banks should be hit with an additional £1billion tax grab until the deficit is eliminated, the Liberal Democrats said.

The raid on the financial sector - which would effectively strip banks of the benefit of recent corporation tax cuts - forms part of the party's economic blueprint for the next parliament.

It will be included in the manifesto for May's general election if - as looks likely - Chancellor George Osborne is not persuaded to include it in the final budget of the parliament later this month.

Like the Conservatives, the Lib Dems are committed to a further £30 billion of fiscal "consolidation" in the new parliament to clear the deficit in the public finances by 2017/18.

But unlike the Tories - who say they would do it through a combination of spending and welfare cuts and a further clampdown of tax avoidance - the Lib Dems say they would seek to raise at least £8 billion through additional taxes.

Liberal Democrat Chief Secretary to the Treasury Danny Alexander said the banks had recovered sufficiently to make a contribution to deficit reduction on top of the existing bank levy.

"Failings in the banking system were a major factor in the great crash of 2008. That is why we have always insisted that the banks help fund repairing the economy," he said.

"To that end, we introduced the Bank Levy which is on track to raise £8 billion in this parliament. With the final stage of deficit reduction requiring around £30 billion of savings, it would be totally wrong for all of that to be found from cuts to public services as the Conservatives propose.

"Liberal Democrats believe that we must balance the books and do so fairly, so it is only right to reconsider whether banks are making a fair contribution to deficit reduction. This tax would remain in place until that job is complete.

"Many banks were left seriously weakened after the crash. But as a result of our comprehensive range of reforms, and the strong economic recovery, the banking sector is now returning to health and profitability.

"So now is the right time to ask the sector to contribute a little more to help us balance the nation's books. That's the right way to keep our strong economy on track, and build a fairer society too."

Belfast Telegraph

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