Banks to be taxed for not lending to SMEs

Banks may face a new tax on any profits if they do not start to lend more to SMEs and other companies in need of credit as well as start limiting their bonuses according to the Business Secretary.

Vince Cable stated that if back payouts to shareholders and staff were trimmed then approximately £50bn could be generated towards new business lending.

At a news conference he stated that dividend payments are too large along with bonuses and the Government needs to look into placing a tax on profits in order to properly choose a way to re-invest into businesses.  He also said that they hope the Government will not have to use sanctions to force lending, but it will remain an option.

Cable’s warning complimented the publishing of a new consultation paper from the Business Department and Treasury that looked at ways to increase business’ access to cash flow.

More government loan guarantees, stock exchanges on a regional level, and other methods to boost liquidity in the banking system were also suggested as a way to promote more financing among banks.

The Business Secretary stated that at the moment complaints from businesses that they cannot get proper access to finance is simply falling on deaf ears as banks continue to maintain that they are lending at an 80% level.

He added that the problem is especially large for SMEs that cannot find the proper finance impairing their ability to create jobs.