Banks make a key contribution to our economy, but also need to make a fair contribution. With this in mind, the Chancellor keeps all taxation, including taxes on the financial sector and stamp duty on shares, under review as part of the Budget process. I am sure you will join me in welcoming the announcement in the Summer Budget of the introduction of a new 8 per cent surcharge on bank profits from 1 January next year, as the bank levy is gradually reduced. This will help get the balance right, meaning more will be raised from the banks this Parliament, but at the same time make the country will become a more competitive place to do business.
You are probably aware that the Government is not opposed in principle to others introducing an FTT, but does have concerns about the design of the tax currently proposed by the European Commission. It is because of those concerns that, although Ministers continue to engage with international partners on an FTT, there are no plans to sign up to the current proposals for a number of reasons.
In particular, Ministers are of the view that an FTT would have to be applied globally; otherwise those transactions covered by the tax would simply relocate to countries that chose not to apply it. This is a concern I share. The EU Commission's own assessment of the impact of an FTT applied only in the EU assumes the relocation of 70 per cent to 90 per cent of some markets away from the EU.
It should also be noted that the UK is not alone in its stance, with only 11 of 28 member states agreeing to adopt an FTT by 2016.