FACTBOX-State of play on global bank levies pre-UK budget

June 21, 2010

June 21 (Reuters) – British Finance Minister George Osborne will unveil plans for an extra tax on banks to pay for bailouts on Tuesday as part of a budget expected to be the most austere in 30 years.

He has said the tax will be introduced regardless of whether other countries follow suit. The following is the state of play of plans elsewhere in the world to shield taxpayers from having to shore up banks again.

If Britain adopted a tax similar to the one touted in the United States, it would raise 3.5 billion to 5 billion pounds ($5.19 billion to $7.42 billion), analysts have estimated.


The International Monetary Fund will present its final report on a possible bank tax to G20 leaders in Toronto this week but the group’s finance ministers agreed earlier this month not to pursue a uniform bank levy due to opposition from Canada, Brazil and Japan.

Instead, the G20 — whose members also include the United States, France, Germany and Britain — will agree the principle that banks should pay for their own bailouts in future, leaving the method up to each country.

Without a common levy, it would be hard for an individual country to impose a punitive tax as it could prompt banks to shift operations elsewhere.


U.S. President Barack Obama proposed in January a 0.15 percent levy on banks’ balance sheets, less their insured deposits and Tier 1 capital. It would raise about $117 billion over a 10 year period.

The tax would recoup taxpayer aid paid so far during the financial crisis and not build up a fund for a future crisis.

The United States is finalising a sweeping reform of Wall Street and the levy plan is not expected to make it into the final legislation due to be approved by Congress soon.


EU leaders last week backed a call from Germany for a levy on banks after the bloc’s executive European Commission put forward ideas for a network of national funds.

There is disagreement over what to do with the money raised, with Germany and Sweden backing the creation of ring fenced funds to pay for future bailouts. Britain and France say money raised should go into their general treasury pot.

The commission said an extra tax on banks could raise up to 13 billion euros annually if the Sweden’s Stability Fee model was applied across the EU, and more than 50 billion euros if a U.S. style levy was introduced. The commission will publish a draft law next year.


Germany is planning a levy on banks which could raise about 1 billion euros ($1.24 billion) a year.


Its levy aims to raise about $10 billion from its banks to put into a special fund to pay for bank bailouts in future.

((Reporting by Huw Jones, editing by Patrick Graham; huw.jones@thomsonreuters.com; + 44 207 542 3326))

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