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Banks Must Pay ‘Substantial Contribution,’ U.K. Treasury Says

Dec. 5 (Bloomberg) -- The U.K. wants banks to pay a “fair and substantial contribution” and is committed to developing a tax on financial activities, the Treasury said after the Sunday Times reported additional levies on bonuses may be introduced.

The coalition government plans to tackle the bonus culture at financial companies, including adding a new levy similar to the one-time 50 percent tax introduced by former Chancellor of the Exchequer Alistair Darling, the newspaper said, citing unidentified senior government officials.

“The government is committed to ensuring that banks pay a fair and substantial contribution reflecting the risks they pose to the financial system and wider economy,” the Treasury said in an e-mailed statement. “Working with international partners, the government is also committed to taking forward work on a Financial Activities Tax on profits and remuneration.”

A bank levy is expected to raise 2.5 billion pounds ($4 billion) a year once it is fully in place, said the Treasury. In his June budget, Chancellor of the Exchequer George Osborne proposed a charge of 0.04 percent on balance sheets when the tax is introduced on Jan. 1, rising to 0.07 percent for the fiscal year starting in April.

The rate at which it is being levied will be announced before the end of 2010, the Treasury said on Nov. 14.

To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net. Thomas Penny in London at tpenny@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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