Labour’s Treasury financial secretary Chris Leslie has called for an urgent review of bank taxation, attacking the Government’s bank levy as “pathetically small”.
Speaking during a 12-hour marathon Commons debate on the Finance Bill last week, Leslie said the Government has missed an opportunity to put banks on a fair tax basis and recommended that Labour’s bonus tax should be repeated.
He said: “We advocate a fairly urgent review of the general levels of bank taxation in this country. Today’s debate should provide an opportun-ity to seek proper redress for the crisis and ensure we put the banks on a fair tax basis but that is not what the Government is seeking with this pathetically small bank levy.”
Leslie says under initial Government proposals, published in July, banks with more than £20bn of liabilities and assets would have paid the levy on all assets, bringing in £3.9bn.
He says the Government “panicked” when it realised this would bring in £1.5bn more than the £2.4bn the Treasury expected to raise.
In November, the Treasury announced it will switch the threshold approach to a tax-free allowance where banks will only pay the levy on assets over £20bn, which will reduce the yield to £2.6bn.
From 2012, the levy will be 0.078 per cent of banks’ balance sheets.
Leslie said: “We need to understand why the Government moved from a threshold approach to triggering the bank levy, to a tax-free allowance.”