* Banding plan abandoned after industry consultation
* Other changes still under consideration
LONDON, June 26 (Reuters) - Britain has scrapped a plannedchange to its three-year old bank levy, which has failed toraise as much money as expected, after resistance from theindustry, the government said on Thursday.
In his annual budget statement in March, Britain's financeminister George Osborne said the government would consult onpossible changes to the levy which would see banks put intodifferent bands with each band charged a set amount.
However, Economic Secretary Andrea Leadsom said on Thursdaythat feedback from banks, building societies and advisory bodiessuggested the change would create uncertainty over banks'charges, strengthen the incentive for them to relocateactivities overseas and create arbitrary differences between thetax rates for different banks.
"Reflecting on these concerns - which were raised by banksof different domicile, structure and balance sheet size andtrajectory - the government has decided against the introductionof a banding approach for the bank levy and has no plans toconsider this idea further," Leadsom said.
The government is still considering other potential changesto the levy, which was introduced in 2011 with the aim ofensuring banks made a fair contribution to the potential risksthey pose to the financial system.
The levy, which has never raised the targeted 2.5 billionpounds ($4.3 billion) a year, applies to the global balancesheet assets of British banks as well as assets belonging to theUK operations of foreign banks.
In an effort to boost proceeds from its bank levy, thegovernment has raised the rate seven times since its launchbecause banks' downsizing meant there were fewer assets to tax.
Britain is expected to raise 2.3 billion pounds from thelevy this year, according to government data, compared with 1.6billion in the previous two years.
($1 = 0.5889 British Pounds) (Reporting by Matt Scuffham; Editing by Mark Potter)
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