Chancellor George Osborne has rejected renewed calls from Labour to repeat the one-off tax on bank bonuses.
At Treasury questions this afternoon, Shadow Chancellor Ed Balls called for the Government to repeat the bank bonus tax on top of the Government’s annual bank levy to help fund a training scheme for 119,000 18-25 year olds currently not in education, employment or training.
Osborne told MPs that PAYE and corporation tax take from the banks had risen from £17.3bn in financial year 2009/10 to £21bn for the financial year 2010/2011, an increase of 21 per cent. He added the bank levy will raise more money each year than the bonus tax did.
He said: “We expect the new bank levy introduced by this Government to raise an addition £2.5bn net each year, more in each and every year than the previous Government raised in its payroll tax.”
Labour’s bank bonus tax imposed a 50 per cent charge on bonuses above £25,000 between December 2009 and April 2010, raising £2.3bn. Introduced by the coalition, the on-going bank levy places a charge of 0.075 per cent on bank’s balance sheets. This is due to rise to 0.078 per cent in April 2012, when it is expected to raise £2.5bn a year.
Osborne quoted former Chancellor Alistair Darling, who introduced the bank bonus tax, as saying it needed to be one-off because “frankly the very people you are after are very good at getting out of these things and will find all sorts of imaginative ways of avoiding it”.
Osborne added: “That is why we introduced a much more permanent and sustainable tax on banks.”
It was reported last week that any recommendations for structural reform of banks made by the Independent Commission on Banking, due to publish its final report on September 12, might not be introduced before 2015. Balls accused Osborne of having one rule for banks and another for everyone else.
Balls said: “The question people will be asking is if the Chancellor will not change his mind on the bank bonus tax, if he will not change his mind on VAT and he will not change his mind on the pace of deficit reduction, why is he now changing his mind on stalling bank reform? He said we are all in it together. Why is it one rule for the banks and another rule for everyone else?”