To ensure that the taxpayer gets a “fair” deal, Liberal Democrat Shadow Chancellor Vince Cable has proposed creating a new levy on bank profits, with all the revenue raised going towards tackling the structural deficit in the UK banking system.
This levy would be supplementary to corporation tax. However, Cable says unlike corporation tax it would be payable on all profits made within the tax year, without the deduction of previous years’ losses.
Cable says: “One trillion pounds worth of taxpayer support has gone into keeping the British banking industry afloat. We must find a way to split the banks so that the British public no longer props up casino banking.
“Meanwhile, it is only right for the taxpayer to get a fair deal for the guarantee that they provide to the banking industry.
“A 10 per cent levy on bank profits would be used to pay down the structural deficit that they are partly responsible for creating.”
According to the LibDems, had this levy been in place prior to the financial crisis it would have raised approximately £4bn per year.
Cable is now urging Government to use next month’s pre-Budget report to put forward this proposal so that banks recognise the “explicit guarantee that they currently enjoy”.