18 Jan 2010

No levy on UK banks

7:21 pm on 18 January 2010

A US-style levy on British banks part-owned by the taxpayer has been ruled out by Chancellor Alistair Darling.

President Barack Obama is to impose a 0.15% charge on the largest banks in the United States to recover some of the funds spent propping them up.

In an interview with The Scotsman newspaper, Mr Darling said the Biritsh government did not have similar plans.

Mr Darling said Britain was in a different situation because the government holds shares in the banks it helped.

Fresh measures to curtail banks had been demanded after JP Morgan Chase revealed profits doubled in 2009. The bank also disclosed that pay and bonuses were to rise by 18%.

Mr Darling told The Scotsman: "The Americans are doing something different."

He reiterated the British bail-out involved buying shares in the troubled banks which could be sold in future years "when the time is right".

Tax fallout

Mr Darling's comments come after London Mayor Boris Johnson claimed around 9000 bankers may leave the City of London following a tax on bonuses over £25,000 and a tax rate of 50% for top earners.

The chancellor announced a one-off 50% tax on bonuses in December.

Prime Minister Gordon Brown described the tax as "the toughest in the world".

In an interview with the Daily Telegraph, Business Secretary Peter Mandelson said banks should "reflect on" their decision to continue paying large bonuses regardless. "The point was to modify banks' behaviour. You can argue the immediate effect has been not to change their behaviour."

But he also argued that the 50% top rate of tax announced in April 2009 should be temporary, adding: "I would favour, when circumstances permit, for the top rate to come down, just as it has gone up when times were hard."