UK’s Osborne to detail bank levy after heavy lobbying

By Sudip Kar-Gupta

LONDON (BestGrowthStock) – Britain’s finance minister pledged on Wednesday to seek the “maximum sustainable” revenue from the finance sector, including a long-flagged levy on banks that the industry has lobbied heavily to minimize.

Minister George Osborne, unveiling the harshest government spending cuts in decades, promised to publish legislation on Thursday on the bank levy it announced in June.

He said that as part of moves to cut a record budget deficit, Britain would look to “extract the maximum sustainable tax revenues from financial services.”

Britain’s finance sector is estimated to contribute some 10 percent to UK gross domestic product (GDP), and bankers have used this to lobby the government, saying too heavy a tax could ultimately harm the economy and drive top talent abroad.

“The impact of the bank levy has been offset by a decrease in corporation taxes,” said Joseph Dickerson, an analyst at brokerage Execution Noble.

CAREFUL LOBBYING BY BANKS

London-headquartered bank Standard Chartered has warned the British capital may be losing its luster as a financial capital due to excessive taxation, and bankers welcomed Osborne’s comments on Wednesday that he did not want to drive banks abroad.

“Decisions taken today will have an effect on the whole industry and in order to remain competitive, UK policies need to be in step with those elsewhere,” the British Bankers Association said in a statement.

“Financial services currently contribute around 24 billion pounds in taxes every year so we are pleased the Chancellor said he wishes to balance taxation with the attractiveness of the UK as a global financial center and the need to retain jobs,” added the BBA.

The government wants to get as close as possible to a maximum 2.5 billion pounds raised by a bank tax set out in July.

However, three people familiar with the matter have told Reuters that HSBC, Standard Chartered and Deutsche Bank have successfully lobbied to reduce their charges.

(Additional reporting by Adrian Croft; Editing by Ruth Pitchford)

UK’s Osborne to detail bank levy after heavy lobbying