PWC says levy could lead to migration of business activity from UK
The British Chancellor George Osborne’s proposed levy on banks based in the UK will have a negative effect the country’s competitiveness as a financial centre, said a tax expert.
From January 2011, the Government will reportedly introduce a bank levy, which will apply to the balance sheets of UK banks and building societies and the UK operations of foreign banks. Osborne said the move would raise £2bn a year once it was fully in place.
Commenting on the proposed banking levy, Peter Maybrey, financial services tax partner, PricewaterhouseCoopers LLP said: ''We are concerned that the proposed bank levy may have an adverse impact on the competitiveness of the UK as a financial services centre - in particular if the UK imposes the levy in advance of other major territories such as the US. Other territories, whose banks have not been as adversely affected in the financial crisis, are likely to resist bringing in a similar levy. Canada, Australia, Japan and Switzerland may fall into this category. This could lead to a migration of business activity from the UK to such other territories which either do not impose a levy or impose one at a lower rate than the UK.
''One of the most difficult issues associated with the levy will be defining which institutions should be subject to the charge. As evidenced by the experience with the Bank Payroll Tax, defining what is a 'bank' and 'banking type activities' is not straightforward.''