* Banding plan abandoned after industry consultation
* Other changes still under consideration
LONDON, June 26 Britain has scrapped a planned
change to its three-year old bank levy, which has failed to
raise as much money as expected, after resistance from the
industry, the government said on Thursday.
In his annual budget statement in March, Britain's finance
minister George Osborne said the government would consult on
possible changes to the levy which would see banks put into
different bands with each band charged a set amount.
However, Economic Secretary Andrea Leadsom said on Thursday
that feedback from banks, building societies and advisory bodies
suggested the change would create uncertainty over banks'
charges, strengthen the incentive for them to relocate
activities overseas and create arbitrary differences between the
tax rates for different banks.
"Reflecting on these concerns - which were raised by banks
of different domicile, structure and balance sheet size and
trajectory - the government has decided against the introduction
of a banding approach for the bank levy and has no plans to
consider this idea further," Leadsom said.
The government is still considering other potential changes
to the levy, which was introduced in 2011 with the aim of
ensuring banks made a fair contribution to the potential risks
they pose to the financial system.
The levy, which has never raised the targeted 2.5 billion
pounds ($4.3 billion) a year, applies to the global balance
sheet assets of British banks as well as assets belonging to the
UK operations of foreign banks.
In an effort to boost proceeds from its bank levy, the
government has raised the rate seven times since its launch
because banks' downsizing meant there were fewer assets to tax.
Britain is expected to raise 2.3 billion pounds from the
levy this year, according to government data, compared with 1.6
billion in the previous two years.
($1 = 0.5889 British Pounds)
(Reporting by Matt Scuffham; Editing by Mark Potter)