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		</div><p><a href="http://londonglossy.com/wp-content/uploads/2011/02/bank-tax-increased-by-extra-800m.jpg"><img class="alignnone size-full" title="George Osborne has increased the levy on banks by an extra £800 million" src="http://londonglossy.com/wp-content/uploads/2011/02/min-bank-tax-increased-by-extra-800m.jpg" alt="George Osborne has increased the levy on banks by an extra £800 million"/></a></p>
<p>Britain&#8217;s bank tax has been increased by an extra £800 million to raise £2.5 billion this year and will be made permanent to ensure banks make a &#8220;fair contribution&#8221;, the Chancellor has said.</p>
<p>George Osborne announced he was scrapping a lower introductory rate originally planned for 2011 as the banking sector is returning to health faster than expected.</p>
<p>He said he wanted to make sure &#8220;banks make a fair contribution to closing the deficit&#8221;.</p>
<p>Mr Osborne denied the move was politically motivated, but it comes as so-called Project Merlin talks with banks to rein in bonuses and increase business lending reach a crunch point.</p>
<p>Speaking on the BBC Radio 4 Today programme, Mr Osborne admitted he had not yet reached agreement on limiting bankers&#8217; bonuses and said he hoped making the tax position plain would aid the prospects of a deal.</p>
<p>He said: &#8220;What really matters is if we get a measurable and significant increase in lending to small and medium-sized businesses. That&#8217;s what people will want to look at when we conclude a deal, if we conclude a deal. It&#8217;s very important to get all the components in place. Today&#8217;s announcement clears the way so now banks know where they are on taxation.&#8221;</p>
<p>He added: &#8220;I&#8217;m still confident we can secure a deal with the banks on seeing an increase in lending to small businesses and see that bonuses are lower this year than last year,&#8221; he said.</p>
<p>Shadow chancellor Ed Balls said: &#8220;After all George Osborne&#8217;s tough talk on the banks in recent weeks and months, this morning&#8217;s hurried and panicky announcement is a damp squib.&#8221;</p>
<p>The Treasury had planned to phase the levy in, with banks paying a lower introductory rate on their balance sheets since the start of the year.</p>
<p>But the tax &#8211; introduced on January 1 &#8211; will be increased in March and April to offset this before settling at 0.075% a month. It will raise the full £2.5 billion target in 2011 and 2012 before rising to £2.6 billion for the following years.</p>
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