Dated: 18 October 2010
Commenting on Alan Johnson’s call for a higher bank levy, Alistair Tebbit, spokesman for the Institute of Directors, said:
“We are concerned already about the impact that the Government’s bank levy of £2.5bn might have on the City of London and corporation tax revenues. The chances of banking business disappearing overseas would increase significantly if – as advocated by Alan Johnson – the bank levy was increased by another £3.5bn.
“Further increases in the bank levy, designed by politicians to tap into anti-bank sentiment and raise some revenue, are very risky. Banks are perfectly capable of relocating their holding companies outside the UK and maintaining UK branches to conduct their UK business. Such actions might not affect revenue from the levy, but they would affect revenue from corporation tax.
He added:
“Germany is hoping to raise €1.2bn annually from its bank levy. The UK already plans to exceed this with a levy of £2.5bn. This wider context must be taken into account by politicians of all parties, otherwise the UK will simply drive away banking business that does not need to be conducted in the UK.”
