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London, England, United Kingdom (AHN) – The bank tax imposed Thursday by the British coalition government will be just 0.04 percent, which is lower than expectations. Because the levy on bank balance sheets would raise just about $3.75 billion (2.5 billion pounds), the government has been accused of going soft on banks.

City Minister Mark Hoban said the 0.04 percent is just an initial rate, and it would go up to 0.07 percent. Hoban said the banks should make a full and fair contribution in relation to the potential risks they pose to Britain’s financial system and the wider economy.

While Chancellor George Osborne had previously said banks would be charged the maximum sustainable tax to prevent a repeat of the global financial crisis, he said the government could not impose a punitive tax rate for fear of pushing the financial institutions to relocate overseas.

The British Bankers Association opposed any form of tax on balance sheets because they could be taxed for the same assets in different countries where they have offshore units. France and Germany said in June they also plan to introduce a levy on banks.

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