Alistair Darling Pressured by Conservatives for Bank Tax

In an interesting turn of events, Alistair Darling has come under pressure from British conservatives to put a bank tax on those financial institutions operating in the City of London.

David Cameron recently committed to a tax being put in place by the Tories if there were no actions taken on a global level. The Tories had been against the tax because of the strong possibility imposing it would drive business away from the area to other countries.

The tax would be for the purpose of paying back taxpayers for bailing out the British banks and increasing insurance to fend against potential crises in the future.

Darling will support such a tax according to Treasury officials, but it would be based on an internationally agreed tax.

Predictably, the British Bankers’ Association strongly responded to and attacked the proposal saying, “We are ready and willing to work for change, but we believe any further reforms need to be timely, considered and internationally co-ordinated so they do not restrict credit to individuals and businesses as the recovery picks up speed.”

While conservatives wouldn't be drawn into committing to specific numbers, they did say it should be far less than what others have proposed of £5 billion.

I have to admit I was disappointed to hear the Tories line up behind a levy on the banks, as I believe they were right originally in stating it would in fact drive businesses out of the area. Of course that would depend upon the size and duration of the tax, but the turnaround is somewhat of a surprise, which means the British must support it in some way on a larger scale, otherwise the Tories wouldn't be pushing for it.