THE government risks driving droves of companies overseas and losing out on billions in revenues if it goes ahead with imposing a stricter tax regime on the banking sector, the City warned yesterday.<br /><br />The stark warning from City leaders came as it emerged that the government is considering a sweeping change to the fiscal burden on the banks, including the possibility of a &ldquo;windfall&rdquo; tax on profits.<br /><br />Also being considered are changes to the way the banks calculate their corporation tax contributions, including withdrawing the possibility of firms offsetting their losses against future tax payments.<br /><br />But Angela Knight, chief executive lobby group, the British Bankers&rsquo; Association, said: &ldquo;This might rake in more tax revenue in the first and perhaps the second year, but what it will have done, at a stroke, is to make the UK a much less attractive location for banks. While it may suit the government politically, the detriment to the UK would be very significant. Why would banks then want to stay here?&rdquo;<br /><br />Those comments came as Barclays chairman Marcus Agius warned UK banks risked being put into an uncompetitive position because of tight regulations being imposed on them.<br /><br />The news comes after public anger over colossal banking bonuses was reignited last week when Goldman Sachs posted third quarter earnings that revealed it is on track to dole out a record $22bn (&pound;13.5bn) in compensation at the end of the year.<br /><br />A Treasury spokesman said all tax policies are routinely kept under review and that the chancellor would set out his views on tax in the pre-budget report in November. The government is already working on a new tax code with the banks.<br /><br />Meanwhile, the Conservatives pointed to a speech given by George Osborne at the party conference less than a fortnight ago, in which the shadow chancellor said: &ldquo;If we find the money that should be going into stronger bank balance sheets is being unreasonably diverted into bigger pay and bonuses, we reserve the right to take further action &ndash; and that includes using the tax system.&rdquo;