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Labour blasts Govt for £1.4bn banking levy shortfall

Chris Leslie 480

Labour has blasted the Government for failing to stand up to the banks as Office for Budget Responsibility figures show the bank levy is likely to raise £1.4bn less than expected in 2012/13.

The OBR’s twice-yearly report, published last month, predicts the levy will raise just £1.8bn for the second financial year in a row instead of the £2.5bn promised by the Government.

The Government was forced to raise the levy for the fifth time in the Autumn Statement in a bid to meet the shortfall.

The tax was introduced as part of the coalition agreement and will rise from its current level of 1.105 per cent to 0.13 per cent next year.

The OBR predicts the latest increase combined with a stronger economy will see at least £2.8bn raised every financial year until 2017/18.

Shadow Treasury financial secretary Chris Leslie has called for a repeat of Labour’s 2009 tax on bankers’ bonuses on top of the bank levy.

He says: “Whether it is on taxation or watering down reforms to separate retail and investment banks, David Cameron and George Osborne have repeatedly failed to stand up to the vested interests of the banks.”

Banking consultant Mehrdad Yousefi says: “The Government has obviously got its sums wrong and the Treasury is confused. It has over-regulated banks and they have made lower profits, meaning the levy raises less money.

“It would not surprise me to see the levy rising all the way to the next election as banks are an easy target. Opposition parties may criticise but anyone would have problems trying to raise this money from banks right now.”

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