IMF bank tax proposals: A summary

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The Oxford University Centre for Business Taxation has released a detailed summary of the two new proposed bank taxes.

Under the new proposals, all institutions would pay a financial stability contribution (FSC) - which would initially be levied on a flat rate, but would be adjusted over time to reflect the risk at each institution – as well as a new financial activities tax (dubbed the 'FAT' tax) on profits and pay.

According to the report, the 'FAT' tax could be considered as an alternative to VAT (which is not currently chargeable in the banking sector and could work to shrink the financial sector in line with the rest of the economy.

It also warns that the FSC could encourage greater risk taking in the sector by offering an insurance against riskier transactions.

Both taxes...

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Gina Dyer
Deputy Editor
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