Lib Dems call for bank tax hike to plug TfL funding gap
The Liberal Democrats have called for taxes on banks to be hiked to help fill Transport for London’s (TfL) £6.6bn funding gap.
The party called the long-running TfL funding saga between the government and mayor of London Sadiq Khan a “a ridiculous macho battle”, while urging them to “sort this mess out”.
Khan last night said he would have to cut TfL services and oversee a “managed decline” of the network if the government cannot offer a large long-term settlement, after 18 months of wrangling between City Hall and Whitehall.
Lib Dem MP Sarah Olney said “instead of keeping London moving, [the government] are cutting taxes on bankers and domestic flights” and that these taxes should go up to fill the funding gap.
A senior Treasury source said the premise of the policy is plainly wrong, as taxes on banks are set to increase, while also labelling the Liberal Democrats as a “sad pressure group “.
The bank surcharge, an extra tax on bank profits, is set to be cut from 8 to 3 per cent from 2023.
It will come at the same time as a planned 6 per cent increase in corporation tax for the UK’s largest companies, meaning that banks will still pay a higher rate of tax by 2023 compared to current rates.
A senior Treasury source said: “It’s opportunistic, impressionistic policy making from what is now a sad pressure group, a limp one at that, which is what the Liberal Democrats have become.”
Late on Wednesday evening, TfL’s finance committee published the bleakest assessment yet of the future of London’s public transport network, outlining an 18 per cent reduction in bus services and a 9 per cent decline in tube services unless emergency funding is found.
The report said projected finances had worsened by £1.2bn over the course of 2022-25 due to inflationary pressures and a slower recovery than forecast in passenger numbers.
TfL has received three emergency bailouts since the beginning of the Covid-19 pandemic, the latest of which runs out in just over three weeks.
A package of £500m this year and £1.2bn for 2022-23 has already been requested, with the Department for Transport set to rule by 11 December.
Reversing the bank surcharge cut, and taxing the profits of banks at 33 per cent, would bring in an extra £1.8bn between 2023 and 2025.
A government spokesperson said: “We have repeatedly shown our commitment to supporting London’s transport network through the pandemic, providing more than £4bn in emergency funding to Transport for London.
“We will continue to discuss any further funding requirements with TfL and the mayor, and any support provided will focus on getting TfL back onto a sustainable financial footing in a way that is fair to taxpayers across the country.”