Chancellor Considers Reversing Bank Surcharge Cut Amid Fiscal Pressure
John Healey to unveil tough Budget on October 28th, with potential tax increases on financial services sector to fund support packages.
Carla Rooney
The UK Chancellor is considering reversing a reduction in the surcharge banks pay on their profits.
Healey and Prime Minister Andy Burnham have pledged support for families and businesses grappling with cost-of-living pressures.
Healey's budget will include an energy support package for households and businesses. The Chancellor made these comments on the sidelines of the International Monetary Fund meetings in Bangkok, acknowledging the Prime Minister's recognition of the cost of business, not just the cost of living.
The Trades Union Congress (TUC) demands the Chancellor increase taxes on banks. Paul Nowak stated, "Britain’s big four banks are making a billion pounds a week, while bonuses have hit a post-crash record. These are bumper profits – driven by high interest rates and households’ mortgage misery. The Treasury has already lost £6 billion in revenue from the Tories’ senseless bank tax cut – now it’s time to make sure banks pay their fair share."
The UK's four largest lenders generated £200 billion in pre-tax profits over the past five years. The 3% surcharge on these institutions was previously 8% before Rishi Sunak reduced it, simultaneously raising corporation tax from 19% to 25%.
Lloyds benefited from using financial crisis losses to lower its tax bills. The banking sector contributed nearly £40 billion to the Treasury last year, including employee income tax.
Speculation mounts that John Healey plans a raid on the financial services sector in the Budget. A Treasury spokesperson stated, "As has always been the case, decisions on tax are a matter for the Chancellor to set out at fiscal events, rather than routinely commenting on rumour, speculation or proposals."
Conservatives and City groups contend that targeting banks would stifle investment and damage Britain’s competitiveness as a financial centre. Andrew Griffith claims a raid on the financial services sector will stifle growth.
Where we want to do things, we have to make sure that we can pay for them within the budgets that we’ve got and control spending.
Healey affirmed, "Where we want to do things, we have to make sure that we can pay for them within the budgets that we’ve got and control spending."