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(Clauses 1, 4, 8, 189 and 209, Schedules 1, 23 and 33, and certain new Clauses and new Schedules relating to value added tax)

It is a great pleasure to contribute to the debate on how we should tax our banks. First, it is important to put on the record the fact that I think banks should pay their share towards paying down the deficit. Every day, we are borrowing more money to pay for public services, so it is important for the banks to pay their share so that the deficit can be dealt with as soon as possible. How, then, does one take money or tax? As a tax accountant by training, I know that there are many different ways of extracting revenue from businesses. We can tax them based on their income or their profits or in many other different ways. One thing about the bank levy introduced by this Government is that it guarantees that the banks will pay some tax. If they are loss making, their losses will not wipe out that tax. The bank levy cannot increase the losses; it is non-tax deductible for corporation tax purposes. We will be ensuring that, each year, the banks pay their fair share towards reducing the deficit. Reductions in corporation tax are also not taken into account in the levy. It is absolutely the right thing to do to cut corporation tax. We need to cut it for all our businesses, to promote entrepreneurship, so that our businesses have more money left over at the end of every year to invest in new employment, new plant and machinery and shareholder returns. Given that shareholders are often our pension funds, it is extremely important that we ensure that those pension funds get the return that they so desperately need to allow our pensioners to enjoy the living standards they expect. As I say, reducing corporation tax is important, but we need to ensure that the banks do not benefit too much from that reduction—and the bank levy makes that happen.