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		</div><p><a href="http://londonglossy.com/wp-content/uploads/2011/02/surprise-800m-tax-raid-on-banks.jpg"><img class="alignnone size-full" title="Chancellor George Osborne has increased the levy on banks by an extra £800 million" src="http://londonglossy.com/wp-content/uploads/2011/02/min-surprise-800m-tax-raid-on-banks.jpg" alt="Chancellor George Osborne has increased the levy on banks by an extra £800 million"/></a></p>
<p>Chancellor George Osborne has hit the banks with a surprise £800 million tax raid as he announced the Government&#8217;s new bank levy was to be made permanent.</p>
<p>The unexpected move &#8211; unveiled by Mr Osborne on the BBC Radio 4 Today programme &#8211; was greeted with shock and anger by the banks, with some bank chiefs reported to be &#8220;livid&#8221;.</p>
<p>The British Bankers&#8217; Association (BBA) accused the Chancellor of &#8220;changing the tax goalposts&#8221; and warned it would make the UK a less attractive place for businesses to operate.</p>
<p>The increase was dismissed by shadow chancellor Ed Balls as a &#8220;damp squib&#8221; intended to deflect attention away from the Government&#8217;s failure to secure a wider agreement with the banks on bonuses and business lending.</p>
<p>However Mr Osborne insisted he expected to make an announcement &#8220;in the next week&#8221; on the Government&#8217;s so-called Project Merlin talks with the banks, following months of sparring between the two sides.</p>
<p>He said the announcement on the bank levy should pave the way for a deal to curb bonus pay-outs while increasing lending to cash-starved small and medium-sized firms. 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.</p>
<p>&#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;</p>
<p>The BBA however criticised the Treasury for making last-minute adjustments to the levy which was announced in last year&#8217;s Budget. &#8220;The levy itself is complex and will hit our most global banks hardest as they operate and pay tax across national boundaries,&#8221; it said in a statement.</p>
<p>Mr Osborne said he was scrapping the lower introductory rate originally planned for 2011 as the banking sector is returning to health faster than expected.</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. But the tax will be increased in March and April to offset this before settling at 0.075% a month. The tax, which was introduced on January 1, will now 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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