Liberal Democrat Chief Secretary to the Treasury Danny Alexander has announced details of a plan to raise an extra £1bn from a supplementary corporation tax charge applied to banks to help finish the job of eliminating the deficit.
The supplementary charge will be in addition to the existing Bank Levy. The Lib Dems will push for this measure to be included in the forthcoming budget. If resisted by the Conservatives, then the proposal will be in the party’s manifesto.
After the banking sector crashed the economy in 2008 due to their reckless behaviour, ignored by the Labour government and its ‘light-touch’ regulation, the proposal is part of the Liberal Democrats’ continued push to ensure the banks pay their dues after being bailed out by taxpayers.
Danny Alexander MP said:
“Failings in the banking system were a major factor in the great crash of 2008. That is why we have always insisted that the banks help fund repairing the economy.
“To that end, we introduced the Bank Levy which is on track to raise £8 billion in this Parliament. With the final stage of deficit reduction requiring around £30 billion of savings, it would be totally wrong for all of that to be found from cuts to public services as the Conservatives propose.
“Liberal Democrats believe that we must balance the books and do so fairly, so it is only right to reconsider whether banks are making a fair contribution to deficit reduction. This tax would remain in place until that job is complete.”
The supplementary charge will remain in force until our fiscal mandate is met. The rate will be set at 8 per cent. This will effectively remove the series of Corporation Tax reductions introduced since 2010 from the banks.
Danny Alexander added: “Many banks were left seriously weakened after the crash. But as a result of our comprehensive range of reforms, and the strong economic recovery, the banking sector is now returning to health and profitability.
“So now is the right time to ask the sector to contribute a little more to help us balance the nation’s books. That’s the right way to keep our strong economy on track, and build a fairer society too.”
All the revenue raised from the supplementary charge would go towards deficit reduction and is part of the broader package announced by the Deputy Prime Minister and the Chief Secretary to the Treasury on February 5 to balance the books fairly.
Greg Mulholland MP also said:
“The banks must pay their fair share in helping to reduce the deficit, especially given it was their reckless behaviour, ignored by the Labour Government and their ‘light touch’ regulation, which crashed the economy in 2008. The public want to be confident that the banking sector is paying its dues after being bailed out by taxpayer money.
“Liberal Democrats want a fairer society and with our banking levy having already raised £8bn, this additional charge will ensure a further £1bn goes from the banks to the Treasury. I want to see this proposal in the Budget on 18th March- if the Tories resist, it will be in the Liberal Democrats’ election manifesto.”