Page last updated at 13:54 GMT, Saturday, 16 January 2010

Chancellor Alistair Darling rules out levy on UK banks

Alastair Darling
Mr Darling believes the UK can recoup money by selling shares in banks

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 hit the largest US banks with a 0.15% charge on liabilities to recover some of the billions spent propping the firms.

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

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

Fresh measures to curtail banks had been demanded after US giant 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 UK bail-out involved buying shares in the troubled banks which could be sold in future years "when the time is right".

Bankers can't now use the excuse that they will go abroad, because if America is doing it there is nowhere else to go
John Mann MP

Shadow chancellor George Osborne has said he would support a levy if there was an agreement to apply it across all major economies.

But one Labour backbencher has called for tougher restrictions on banks.

John Mann said: "We have the ability now to copy what Obama has done on the principle of taxing bankers' bonuses.

"Bankers can't now use the excuse that they will go abroad, because if America is doing it there is nowhere else to go."

Mr Darling's comments come after Mayor of London Boris Johnson claimed around 9,000 bankers may leave the City of London following a tax on bonuses over £25,000 and a 50p rate for top earners.

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

'Huge difficulties'

Prime Minister Gordon Brown described the tax as "the toughest in the world", but added that more nations needed to adopt the tax to make it effective.

He said: "It has caused us huge difficulties because people then say 'Well, why shouldn't I move to another country?'

"We would like other countries to do what France has done in following us."

Answering questions from conference delegates in London, he continued: "We believe we will probably make a profit from what we have done in helping out the banks.

"Our aim is that no member of the public has to pay for the rescuing."

In an interview with the Daily Telegraph, Business Secretary Peter Mandelson said banks should "reflect on" their decision to continue paying large bonuses regardless.

He said: "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 50p 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."

Print Sponsor

Tax on bonuses 'threatens London'
15 Jan 10 |  London
Obama outlines $117bn bank levy
14 Jan 10 |  Business
Taxing the rich until their pips squeak
18 Dec 09 |  Business
Banks face new tax on big bonuses
09 Dec 09 |  Business

The BBC is not responsible for the content of external internet sites

Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit


Americas Africa Europe Middle East South Asia Asia Pacific