IMF calls for bigger bank levy
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The International Monetary Fund is calling for a financial activities tax which could see the UK bank levy tripled from £2bn to £6bn.
The proposed tax on bonuses and profits is would cover the risk from banking activities, claims the IMF report.
Although rejecting use of the money to pay for aid, due to the possibility of charges being passed on to consumer,s the IMF report says the tax could raise revenue and service a range of areas.
The chancellor of the exchequer, George Osborne, seemed to back similar proposals with a £2bn bank levy in the emergency Budget last month but did not go as far as the IMF suggests.
In a Treasury report on the bank levy it says the current 0.07% tax is reflective of economic risk but not insurance against failure.
It adds: “Systemic risks must always be assessed in light of the circumstances at the time. The regulatory reforms underway are aimed at ensuring that no firm is too big to fail and that all firms are resolvable.
“The levy is a contribution reflective of economic risk, it is not an insurance against failure or a fund for future resolution.”
The IMF is calling on nations to impose a bank levy because all countries have had a bank-inspired crisis in the last 20 years.
The report says: “If properly designed and resourced, resolution mechanisms will avoid governments in the future being forced to bail out institutions deemed too important, too big, or too interconnected to fail.”
UK banks have already had extra taxation through last year’s one-off bank bonus tax and the repayment of loans with interest.
