LONDON (AP) — The British government published draft legislation yesterday for a permanent tax on banks that is expected to raise about £2.5 billion ($4 billion) a year by 2014.

Mark Hoban, the Treasury's financial secretary, said the tax on balance sheets was intended to encourage greater reliance on stable sources of funding, such as long-term debt and equity.

"It will apply to the global balance sheets of UK banks, and the UK operations of banks from other countries," Hoban said.

The levy will not apply to the first £20 billion of liabilities in the belief that the collapse of banks worth less than that amount would not pose a risk to the financial system.

The government had announced earlier that the levy would be offset by a gradual reduction in corporation tax.

"The government believes that banks should make a full and fair contribution in respect of the potential risks they pose to the UK financial system and wider economy," Hoban said.

The tax will replace a one-time 50 percent tax on bank bonuses above £25,000 pounds which the previous government imposed earlier this year.

The government is looking at further action on bonuses paid to bank employees and is considering possible taxes on benefits and remuneration, as well as new rules on deferral of bonuses.

Bank bonuses have been a sensitive political issue after taxpayers bailed out two major banks — Royal Bank of Scotland and Lloyds Banking Group — and took full ownership of mortgage lender Northern Rock following the credit crunch in 2008.