Banks facing demand for £20bn from Robin Hood tax campaign

Campaigners have renewed calls for a £20 billion tax levy on the financial services industry after claiming it will take nearly 20 years to repay the costs of the banking crisis.

Bank contributions to Treasury funds pale in comparison with the increase in government debts caused by the crisis, according to a report published today by the Robin Hood Tax campaign, which wants the City to take on more responsibility for plugging the hole in the public purse.

The report, entitled There Is An Alternative, estimates that, based on past performance, it will take the financial services sector 18 years to pay enough tax to cover the cost of the banking crisis.

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It pointed to figures from the International Monetary Fund that put the cost of the government debt arising from the crisis at 737bn. That compares with the 203bn tax take from the financial sector in the five years to 2007, said the campaign.

Max Lawson, spokesman for the Robin Hood Tax campaign, said: "These figures nail once and for all the myth that the City of London is some sort of goose laying golden eggs for the taxpayer.

"The contribution banks make in boom years is dwarfed by the cost they impose on us all when things go wrong. It is time our politicians brought big banks to heel and made them pay their fair share. Even the IMF says the financial sector is under-taxed."

The campaign, launched in early 2010, wants an extra 20bn of taxes to be imposed on financial services firms to help fight poverty in the UK and overseas and combat climate change. It believes this can be achieved largely through an average tax of 0.05 per cent on financial transactions including shares, currencies and bonds. The existing share transactions tax already raises 3bn a year for government coffers without an adverse impact on the City, according to the campaign, which described banks' warnings of a move overseas as an empty threat.

Lawson said: "This tax is an idea whose time has come. The public should not pay the price of the reckless profiteering that was allowed to pass for productive activity in the trading rooms of the City.

"Politicians should call bankers' bluff - are they really going to give up a 100bn subsidy to avoid a 20bn tax?"

A proposed financial transactions tax is on the agenda of a meeting of European finance ministers later this month. Nicolas Sarkozy, the French president, and German chancellor Angela Merkel are both in favour, in the face of opposition from the US and UK governments.

The 20bn figure compares with the government's 2.5bn levy on bank profits. The shadow chancellor, Ed Balls, has tabled an amendment to the government's finance bill proposing a 2bn tax on bankers bonuses that would be used to tackle youth unemployment.Speaking on Sunday, Balls hit out at the government's decision to scrap the Labour government's bonuses levy, which raised 2.3bn last year.

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