Rachel Reeves mulls bank tax amid scramble to fill fiscal hole
Rachel Reeves is reported to be weighing up a tax on Britain’s banking giants as the Treasury looks to strum up cash in the forthcoming Autumn Budget.
The Chancellor is expected to be staring down a fiscal blackhole of over £20bn come November 26 and banks have been viewed as an easy – and politically safe – cash grab.
The Treasury has been lobbied by think tanks and rival parties to slap a tax on the lenders.
The left-wing Institute for Public Policy Research (IPPR) released a report over the summer which called for the government to introduce a windfall tax on the banks.
Reeves has appeared to distance herself from the lobbying efforts with the Treasury repeating the mantra that “financial services are at the heart” of its growth mission.
But the i Paper has since reported multiple sources had said the proposal is being actively considered by the Treasury ahead of next month’s budget.
One level Reeves could pull to raise money for the public purse is a hike to the surcharge on lenders.
Bank surcharge in Treasury’s eyes
Former Deputy Prime Minister Angela Rayner had proposed an increase to the levy – which sits on top of corporation tax – to five per cent from three.
Following Rayner’s calls, chief executive of UK Finance David Postings told Morning Wire: “The tax environment has an important bearing on investment decisions and growth.
“To make the UK’s approach to bank taxation globally competitive, we think the government should phase out the bank corporation tax surcharge and the bank levy over time.”
The bosses of banking giants across the UK have joined calls to ease the burden on the industry, warning further taxation could harm economic growth ambitions.
“Additional taxation on banks runs the risk of eroding our continued investment capacity in the business and in supporting our customers, and ultimately in delivering growth for the UK,” HSBC boss Georges Elhedery argued.
Paul Thwaite, NatWest’s chief executive, said “strong economies need strong banks” as he argued he would rather use the bank’s capital for loans to boost growth “for the good of the country”.