Bank Levy

The government has published draft legislation for its levy on bank balance sheets.

The levy (less than 0.1%) will be applied from 2012 on the global balance sheets of UK banks, and the UK operations of banks from other countries.

In theory, it will raise approximately £2.5BN per annum.

It will be interesting to see how the banks "shuffle" their worldwide assets and liabilities in the run up to the introduction of this tax, and indeed how they "reassess" the value of their assets and liabilities.

George Osborne is anticipating some "creative accounting", and is pressuring the banks to sign an anti tax avoidance pledge.

A nice idea, in theory.

However, as any first year accounting student will tell you, tax avoidance is perfectly legal (evasion is illegal). I fail to see how the pledge, if signed, can be enforced.