Page last updated at 13:31 GMT, Sunday, 30 August 2009 14:31 UK

Turner defends bank tax comments

Lord Turner
Lord Turner says taxing banks is not the FSA's job

The boss of UK watchdog the Financial Services Authority (FSA) has defended his comments about new taxes on banks.

FSA chairman Lord Turner said in Prospect magazine that he would be happy to consider a tax on banks to prevent excessive bonus payments.

But he told Sky News that he meant that asking the FSA to deal with high bonuses would be "economic illiteracy".

He also said it was "ridiculous" to think he would propose a new tax on London and not the rest of the world.

"If you are concerned about high bonuses in the City... you cannot ask the FSA to deal with that by regulation," he said.

Lord Turner's argument is that the only way to reduce overall bonuses is to make sure banks make smaller profits.

In the article, he suggested that could be done by either requiring them to keep a higher proportion of their funds deposited at the Bank of England or imposing a new tax on the banks.

But he has now stressed that "I did not propose specifically introducing a tax and it's certainly not the role of the FSA to introduce a tax".

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