Bank tax welcome in U.K. and Europe, but not in U.S.
A businessman walks past the Bank of England in the financial district of London, England.
TEXT OF INTERVIEW
Steve Chiotakis: The British government today continues to grapple with an emergency budget that includes a big tax increase and spending cuts. But one measure included in that plan has proven very popular: a new tax on banks. Supporters are speaking out in London and all across Europe, but still, the idea hasn't been getting the warmest of receptions here in the U.S. Marketplace Europe correspondent Stephen Beard is with us live from London to talk about it. Hi, Stephen.
Stephen Beard: Hello, Steve.
Chitoakis: A bank tax in the U.K., is this sort of punishment for the financial crisis?
Beard: Partly, yes. The government here says the banks helped create the crisis so they should help clean up the mess. But the tax won't be punitive -- it's expected to raise about $3 billion a year; not a huge amount given the size of Britain's banking industry.
Chitoakis: But this is a global economy, right? I'm sure there are some critics who say that the banks will just move somewhere else, I mean where there's not a tax, right?
Beard: That's the worry. But coinciding with yesterday's budget in Britain, France and Germany, also big banking centers, said they're going to have a similar tax, so no point in banks relocating there. And this does put pressure on the U.S. to push through its own bank levy, which seems to have become bogged down in Washington. Bank analyst Michael Prest says this move by Britain, France and Germany makes it easier for the U.S. to follow suite:
Michael Prest: If politicians on Capitol Hill wanted to press ahead with any kind of similar duty and levy in the States, they could make that point that it's quite possible to do this without it really having any great impact on the competitive position.
But Prest says Wall Street may well argue that by not imposing a bank tax, the U.S. could steal a march on European rivals and attract more international bank business to the U.S.
Chitoakis: Marketplace's Stephen Beard, reporting from London. Stephen, thanks.
Beard: OK, Steve.