Bank levy likely to miss revenue target
18 March 2013
The amount of money raised by the bank levy is likely to be below forecast, according to Deloitte, the business advisory firm.
Wayne Weaver, UK banking tax leader at Deloitte, said:
“Banks already face a 2013 levy rate almost 50% higher than 2012, due to a previously announced increase that set the rate at 0.13% of chargeable equity and liabilities. The Office for Budget Responsibility (OBR) has forecast a yield of £1.8bn for the current year. We expect the yield to be close to that figure, based on our review of recently reported bank results, with more than half paid by the big four UK banks. This falls short of the Chancellor’s £2.5bn previous target.
“The OBR also forecast a bank levy yield for 2013/14 of £2.8bn. We predict that the actual yield will be below that target, despite the significantly increased levy rate. One of the bank levy’s original aims was to encourage banks to adopt less risky funding models. As banks continue to shrink their balance sheets and improve their funding profile, their bank levy cost reduces, and this mitigates the effect of the higher rate.
“The Chancellor appears to have these choices:
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