The bank levy: surely this is targeting the wrong thing?

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The government has published legislation for the new thank you levy.

They say it will raise £2.5 billion a year - curiously, a figure lower than that raised by the bank bonus tax that Labour charged, although George Osborne said to the contrary in the House of Commons yesterday.

But of all,this is a pathetically small sum to levy upon the banks when they have £19 billion of tax losses to offset against their future tax bills, as I've shown.

Secondly, I am worried that this is an inappropriate tax. I know it is only targeted on certain parts of the balance sheet, but surely the risk is not within the balance sheet, it is within the trades that take place during the course of the year. Tackling the balance sheet will simply reduce a bank’s capacity to pay, how ever we look at it. Charging a tax on inappropriate trades discourages the specific trades. That has to be the right course of action. In that case we clearly need a financial transaction tax - or a Tobin tax or Robin Hood tax, whichever name you wish to apply to it.

As usual,this government has got things wrong.