From The Guardian:
Responding to complaints from banks that the levy has been raised too often and without warning, Osborne set out a timetable of reductions from 0.21% to 0.18% from January 2016 and 0.17% from January 2017, before reaching 0.10% from January 2021. The levy had been based on global balance sheets, but would from 2021 be focused only on their UK operations.
The bank asset levy is a good tax, so scaling it back is a bad idea but restricting it to UK assets only is a very sensible idea.
The chancellor’s move to scale back the levy, which has raised £8bn since 2010, came alongside a new 8% surcharge on bank profits. Analysts estimated the changes would save major international banks such as HSBC and Standard Chartered almost £1bn in tax a year.
So they are swapping a good tax for a less-good tax. Bad idea.
But in the grander scheme of things, so what? Five years ago, UK corporation tax was 28%; UK banks will now pay 20% normal corporation tax plus 8% surcharge = 28%, so the clock has just been put back five years.
“The proposed changes to the bank levy and introduction of the tax surcharge on banking companies announced in last month’s budget may benefit UK headquartered international banks but will have a disproportionate effect on building societies such as Nationwide,” Beale said.
True. But that is the whole point. If they had done the sensible thing and based the original bank asset levy on UK assets only at a higher rate, this would come to the same thing.
“This represents a missed opportunity to support diversity by acknowledging that building societies are different to banks and to recognise the contribution Nationwide and other mutuals make by lending to the UK economy, and the housing market in particular.”
I read as far as "support diversity". Special pleading. Ignore.
Killer punch line:
The building society said that the impact of the changes to the banking levy and the introduction of a tax surcharge announced in the budget will cost £300m over the next five years. “This is equivalent to the capital required to support about £10bn of lending,” a statement said.
If true, which is questionable, then this is A Very Good Thing indeed, because all that extra lending would just go into higher land prices i.e. transfer wealth from younger buyers to land owners.
Friday, 21 August 2015
From The Guardian:
My latest blogpost: Yes, but that was the whole point.Tweet this! Posted by Mark Wadsworth at 16:16