By Michael Holden
LONDON, March 20 (Reuters) - Britain's opposition Conservatives would introduce a unilateral tax on banks similar to that planned by U.S. President Barack Obama if they win the upcoming election, leader David Cameron said on Saturday.
Prime Minister Gordon Brown's Labour government is expected to outline in next Wednesday's budget a global tax on investment banks as its preferred option for clawing back some of the billions of dollars of state funds swallowed up by the banking sector bailout.
The budget is expected to rule out creating an insurance fund against future failure.
The government has said any levy on banks would need international agreement to prevent an exodus from the City of London, but the Conservatives said they would push ahead without support from other countries.
'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,' said Cameron, whose party is leading polls ahead of a national election expected in May.
'It won't be popular in every part of the City. But I believe it's fair and it's necessary,' he said in a speech in south London.
Cameron said the plans would echo the proposals of Obama, who in January put forward plans for a 0.15 percent tax on the liabilities of big financial institutions.
The level at which a British tax was set would depend on the scale of international agreement for a levy, a Conservative spokesman said.
'We had the biggest bank bailout in the world. We can't just carry on as if nothing happened,' Cameron said. 'In America, President Obama has said he will get taxpayers back every cent they put in. Why should it be any different here?'
STATE BAILOUTS
Both Britain's major parties are looking at how to recover money from financial institutions that benefited from huge bailouts during the financial crisis. Britain was forced to use taxpayer money to buy large stakes in both RBS and Lloyds.
'We want to see ideas such as a systemic levy developed further internationally, and the G20 ... need to press ahead to examine these proposals and agree an international approach,' a Treasury spokesman said.
'Any proposals need to be implemented by all responsible financial centres to be effective.'
Finance minister Alistair Darling is expected to say in the March 24 budget that money raised by any levy should go to national governments, instead of into an insurance scheme.
This would discourage banks from taking future risks and also help Britain address its record budget deficit.
'The banks may prefer an insurance fund. But in many ways it would be a free pass, entitling them to free help when things go wrong and encouraging them to take risks,' a government official said.
Options for the levy include taxing a bank's liabilities, measuring risk-weighted assets or trying to tailor a scheme for individual institutions.
(Additional reporting by Matt Falloon; editing by John Stonestreet) Keywords: BRITAIN BANK/TAX (Reuters messaging: michael.holden@thomsonreuters.com; +44 207 542 3213) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
LONDON, March 20 (Reuters) - Britain's opposition Conservatives would introduce a unilateral tax on banks similar to that planned by U.S. President Barack Obama if they win the upcoming election, leader David Cameron said on Saturday.
Prime Minister Gordon Brown's Labour government is expected to outline in next Wednesday's budget a global tax on investment banks as its preferred option for clawing back some of the billions of dollars of state funds swallowed up by the banking sector bailout.
The budget is expected to rule out creating an insurance fund against future failure.
The government has said any levy on banks would need international agreement to prevent an exodus from the City of London, but the Conservatives said they would push ahead without support from other countries.
'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,' said Cameron, whose party is leading polls ahead of a national election expected in May.
'It won't be popular in every part of the City. But I believe it's fair and it's necessary,' he said in a speech in south London.
Cameron said the plans would echo the proposals of Obama, who in January put forward plans for a 0.15 percent tax on the liabilities of big financial institutions.
The level at which a British tax was set would depend on the scale of international agreement for a levy, a Conservative spokesman said.
'We had the biggest bank bailout in the world. We can't just carry on as if nothing happened,' Cameron said. 'In America, President Obama has said he will get taxpayers back every cent they put in. Why should it be any different here?'
STATE BAILOUTS
Both Britain's major parties are looking at how to recover money from financial institutions that benefited from huge bailouts during the financial crisis. Britain was forced to use taxpayer money to buy large stakes in both RBS and Lloyds.
'We want to see ideas such as a systemic levy developed further internationally, and the G20 ... need to press ahead to examine these proposals and agree an international approach,' a Treasury spokesman said.
'Any proposals need to be implemented by all responsible financial centres to be effective.'
Finance minister Alistair Darling is expected to say in the March 24 budget that money raised by any levy should go to national governments, instead of into an insurance scheme.
This would discourage banks from taking future risks and also help Britain address its record budget deficit.
'The banks may prefer an insurance fund. But in many ways it would be a free pass, entitling them to free help when things go wrong and encouraging them to take risks,' a government official said.
Options for the levy include taxing a bank's liabilities, measuring risk-weighted assets or trying to tailor a scheme for individual institutions.
(Additional reporting by Matt Falloon; editing by John Stonestreet) Keywords: BRITAIN BANK/TAX (Reuters messaging: michael.holden@thomsonreuters.com; +44 207 542 3213) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
© 2010 AFX News
