Budget 2010: banks to face new tax
Updated on 23 March 2010
Britain's banks may face a new tax depending on how risky their trading activities are when the Chancellor, Alistair Darling, stands up to give his budget.
It follows a similar idea floated at the weekend by the Conservatives and comes as development campaigners have been stepping up their demands for a wide-ranging tax on international financial transactions.
Channel 4 News understands the government is working on a plan to make banks pay a tax that will be linked not to their profits but to how risky their trading behaviour is.
The details are still unclear but such a tax could create an incentive for banks to stick to more straight forward lending to companies and consumers and steer away from making big bets on complex financial products that could ruin them if they backfire.
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The main difference with the Conservatives is that the government says its tax would only go ahead if there is an international agreement, though Ministers believe that such a deal is possible. The Conservatives have suggested that they would go ahead with their levy unilaterally.
Labour thinks the tax could raise billions of pounds worldwide, but only a few hundred million in the UK.
The banks must be feeling rather unloved at the moment. In response to the Conservative proposal, the British Bankers Association said any further changes to their taxation needed to be "timely, considered and international co-ordinated".
The banks accept they have been bailed out by the public but argue that all the money will be paid back.
Robin Hood tax
At the same time, a campaign in favour of a levy on all types of financial transaction is gaining support and attracting the interest of both Labour and the Conservatives.
The Robin Hood Tax campaign wants all countries to impose a levy of just 0.05 per cent on all financial trades - be it buying and selling shares, or foreign currencies, or more complex financial products.
That is a tax of just 50 pence on each £1,000 pounds traded. But the reality is that trading across the world's financial markets has become so vast that even a tiny tax will produce hundreds of billions of dollars.
The Robin Hood Tax campaign wants that money directed towards development projects as well as helping to avoid big cuts in public services here in the UK.
The campaign has attracted the support of actors like Bill Nighy and Sienna Miller, as well as the director Richard Curtis.
Nighy's portrayal of a big banker who attempts to argue against the Robin Hood Tax has become a big hit on the internet.
Bill Nighy talked in detail to Channel 4 News about why he decided to get involved with the campaign. He believes that once the levy has started, most banks would not even notice it.
