A tax imposed on financial institutions, typically calculated on their total liabilities or balance sheet size rather than their profits. Bank levies are designed to make banks and other systemically important financial institutions contribute to the cost of potential financial crises before they occur, while also discouraging excessive risk-taking and leverage. Several countries introduced or expanded bank levies following the 2008 global financial crisis as part of broader regulatory reforms to protect taxpayers from future bailout costs.
Example
“The UK's bank levy, charged at 0.10% on qualifying liabilities, generated over £2 billion in annual revenue to help fund the government's financial stability framework.”