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Cameron announces bank tax plan
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David Cameron has committed the Tories to imposing a new tax on banks as both main parties battled to convince voters they would claw back billions of pounds from the financial sector.
The Opposition leader said the US-style levy is needed to ensure taxpayers are repaid in full for the bail-out of financial institutions and protected from future collapses.
His firm pledge came amid renewed confidence of international backing for such a levy - although party sources indicated it would press ahead unilaterally with a more limited measure if not.
Chancellor Alistair Darling is expected to use next week's Budget to signal the Government's support for a global bank tax, although only as part of an international agreement.
He will set out detailed options in Wednesday's statement but will insist money raised should go into Treasury coffers and not be used for an insurance fund against future collapse, the Financial Times said. There are fears that the existence of an insurance fund could act to encourage risk-taking and that any unilateral action could prompt an exodus of banks from the City to less punitive regimes abroad.
The Conservatives have not yet given any detail of how their scheme would operate. US President Barack Obama has signalled his intent to impose a "responsibility fee" and Sweden has introduced a levy.
Mr Cameron singled out the banking industry as one example of "vested interests" he is determined to confront and who he accuses Prime Minister Gordon Brown of failing to stand up to.
"We had the biggest bank bail-out in the world. We can't just carry on as if nothing happened," he said. "In America, President Obama has said he will get taxpayers back every cent they put in. Why should it be any different here? So I can announce today that a Conservative government will introduce a new bank levy to pay back taxpayers for the support they gave and to protect them in the future. No, it won't be popular in every part of the City. But I believe it's fair and it's necessary."
Mr Brown has been a leading advocate of some form of co-ordinated levy on the banks, which could bring in tens of billions of pounds a year from the financial services sector worldwide. He was forced to abandon his preferred option - a "Tobin" tax on transactions - but hopes the IMF will throw its weight behind a measure at its April meeting in Washington ahead of a G20 meeting in June.
The FT said Labour's manifesto could also commit to diverting some of the proceeds into aid for poorer countries - in line with a mounting campaign for a "Robin Hood tax" on the banks.
Reader views (4)
Bank tax notwithstanding, I enjoyed Max Hasting's comment in today's Daily Mail that David Cameron must offer the electorate "a promise of sunlit uplands".
The Tories MUST, as a matter of urgency, adopt this as their official party slogan!
- Peter Seekings-Foster, Mildenhall, Suffolk., 20/03/2010 20:58
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So Brave Dave who wouldn't confront Hague or Ashcroft is going to threaten the Bankers? Not only do they fund the Tory Party but they threaten to go abroad if their pampered existence is at all threatened. Dave must be surrounded by Yes-men who assure him that he is a Big Beast but know that he is a pathetic wimp who everybody will ignore.
- Ted Trent, Fulham England, 20/03/2010 18:25
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Tax "the banks"? Result - lower net profits = lower, or no, dividends for shareholders. ie the tax is "passed on" to the millions of bank personal shareholders who should be natural Tory voters. They are "robbed". What a fine way to encourage investment for the future! When people wake up to the fact that Cameron wants to steal from the prudent Robin Hood will walk off with millions of votes and let Gordon B back in by the back door. Are they all mad?
- Fuzzylogic, Billericay, 20/03/2010 17:23
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Sadly, a badly thought out idea. The banks have plenty of tax losses to carry forward so unless this is changed it will count for nothing. A tax increase will encourage the banks to raise charges even more than we have seen since the 2008 crisis, so the net result is Joe public paying more. There are far better ways of using notional tax for improved lending and stability, putting the money in the government coffers would be a complete waste and do no good for the banks or the economy. Think again Dave and stop shooting from the hip without due thought.
- Jose Luis, London SW18, 20/03/2010 17:13
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