Banks (Taxation)

Oral Answers to Questions — Treasury – in the House of Commons at 2:30 pm on 21 June 2011.

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Photo of Paul Blomfield Paul Blomfield Labour, Sheffield Central 2:30, 21 June 2011

What assessment he has made of the level of taxation of banks.

Photo of Mark Hoban Mark Hoban The Financial Secretary to the Treasury

Banks operating in the UK make a significant contribution to the economy and public finances. However, as the financial crisis demonstrated, the sector also posed a potential risk to the wider economy and it is only fair for the banks to make an additional contribution to reflect that. That is why we have implemented a permanent levy on the balance sheet of banks, which will raise more than £2.5 billion each year.

Photo of Paul Blomfield Paul Blomfield Labour, Sheffield Central

I thank the Minister for that reply, but will he recognise the enormous feeling throughout the country that the banks need to fulfil their responsibility for the challenges we face? Will he therefore explain the stubborn refusal of the Government to repeat last year’s bonus tax, on top of the bank levy, which would generate the revenue to build 25,000 affordable homes and create 100,000 new jobs?

Photo of Mark Hoban Mark Hoban The Financial Secretary to the Treasury

Perhaps the hon. Gentleman should speak to Mr Darling, who said that imposing the bank levy again simply would not work.

Photo of Peter Bone Peter Bone Conservative, Wellingborough

Are the losses on banks that accumulated because of their bad judgment being allowed to be set against future profits? In other words, are they avoiding future tax on future profits?

Photo of Mark Hoban Mark Hoban The Financial Secretary to the Treasury

The corporation tax arrangements for banks are similar to those for other businesses. That is one reason why we have imposed the additional bank levy, which will raise more each year over this Parliament than the previous Government’s bank payroll tax did. It is important that the banks make a contribution to reflect the risk that they pose to the wider economy.