Tories back US-style tax plan for banks

David Cameron (SUPPLIED)

Britain's opposition Conservatives would introduce a unilateral tax on banks similar to the plans of US President Barack Obama if they win the upcoming election, leader David Cameron said yesterday.

The announcement came after the Financial Times reported Prime Minister Gordon Brown's Labour government would in next week's budget endorse plans for a global tax on investment banks but 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.

Cameron said the plans would echo the proposals of Obama, who in January put forward plans for a 0.15 per cent 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, said a Conservative spokesman.

"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?"

Both Britain's major parties are looking at how to claw back money from financial institutions that benefited from huge state bailouts during the financial crisis.

Britain was forced to use taxpayer money to buy large stakes in both RBS and Lloyds.

 

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