Corporate banking levy 'will generate £2.5bn annually'

The corporate banking levy announced in yesterday's (October 20th) spending review is expected to generate £2.5 billion a year by 2012-13.

First raised in June's Emergency Budget, the tax represents a permanent charge on corporate banking activities and is designed to encourage better fiduciary among financial service providers.

Opponents claim the move will stifle activities in a sector that generates a significant amount of income for the country, but support for the measure has grown in the wake of the economic crisis, which many blame on banks' irresponsible lending behaviour.

Due to come into force in January next year, the Guardian claims the charge will in fact be negated by corporate tax breaks, which are to bring tolls down from 28 per cent to 24 per cent in a bid to stimulate commercial activity.

City minister Mark Hoban stated: "The government believes banks should make a full and fair contribution in respect of the potential risks they pose to the UK financial system and wider economy." ADNFCR-2318-ID-800134290-ADNFCR