British banks complain of $62 billion extra tax bill

* Banks being singled out for new "punitive taxes" -BBA

* Burden makes it harder for banks to lend -BBA

By Matt Scuffham

LONDON, July 15 (Reuters) - Britain's banks will have beenhit by an additional 40 billion pound ($62 billion) tax bill bythe end of this decade, harming their ability to lend tobusinesses and create new jobs, an industry lobby group said onWednesday.

Finance Minister George Osborne said last week that thegovernment would replace a levy on bank balance sheets with asurcharge on profits, but the two schemes will run concurrentlyuntil 2020, placing an additional burden on lenders.

The bank levy was introduced in 2011 in response to thefinancial crisis of 2007-2009, in which RBS and Lloyds were bailed out to the tune of 66 billion pounds, andapplies to the global balance sheet assets of British banks aswell as assets belonging to the UK operations of foreign banks.

Osborne had faced a balancing act to ensure London remainsan attractive place for banks to be based while satisfyingpublic demands that the industry helps pay for the lingeringcosts of the crisis.

But the constant imposition of extra charges has alreadydrawn the industry's ire and HSBC, Europe's biggestbank, has said the levy will be a factor in whether it decidesto keep its headquarters in Britain.

The British Bankers Association (BBA) said the latestchanges will mean that, between 2010 and 2020, banks will havefaced an additional 4 billion pounds a year in taxes, on top ofthe tens of billions of other taxes that they have paid such ascorporation tax.

"Banks expect to pay their fair share of tax. But they areconcerned that they are being singled out for new punitive taxesevery year," BBA Chief Executive Anthony Browne said. "Thatmakes it harder for banks ... to lend to businesses and createnew jobs."

Banks such as HSBC and Standard Chartered, whichhave large operations overseas, had said they have been unfairlypenalised by the tax.

Osborne said the levy will be gradually reduced over thenext few years and will apply only to banks' assets in Britainfrom 2020.

The new surcharge will tax banks 8 percent on their profitsfrom next year and is the fifth new bank tax introduced in thepast five years.

The BBA said it will be levied on hundreds of banks andcustomer-owned lenders that were exempt from the bank levy,potentially undermining competition.

($1 = 0.6406 pounds) (Editing by David Holmes)