Berlin · Europa Wire
A union chief called for a tax hike on the “bumper profits” of banks amid speculation John Healey was planning a raid on the financial services sector in the budget. The chancellor is seeking ways to raise revenue and keep the budget deficit under control in the face of soaring government borrowing costs. One option he is considering is reversing former Conservative chancellor Jeremy Hunt ’s reduction in the surcharge banks pay on profits from eight per cent to three per cent, according to the Guardian .
Trades Union Congress general secretary Paul Nowak backed the move, calculating that it would raise £2.25bn a year. “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,” he said.
“The Treasury has already lost £6bn in revenue from the Tories’ senseless bank tax cut. Now it’s time to make sure banks pay their fair share.” The TUC called for an even bigger surcharge hike to 16 per cent, saying that could raise £24bn in tax revenues over four years. TUC general secretary Paul Nowak (PA) Trade unions and think tanks have repeatedly lobbied for heavier taxation for banks.
The Institute for Public Policy Research this week recommended generating £1bn from a temporary surcharge on the windfall profits of commercial banks among a package of measures to raise an extra £16bn to help struggling households. The think tank, which has been influential in Labour policymaking, said the proposals would help rebuild the chancellor’s fiscal buffer, which it estimated has dropped by up to £15bn since the spring. But Tories and City groups have warned that targeting banks would stifle investment and damage the country’s competitiveness as a financial centre.
“The financial services sector is vital to driving investment, innovation and business growth across the economy,” Louise Hellem, chief economist at the Confederation of British Industry , said. “ Government has set the right direction through its Financial Services Growth and Competitiveness Strategy and the Leeds Reforms. The priority now is delivery.” “The autumn budget should set the agenda for a competitive and predictable environment that turns those reforms into tangible progress, unlocking domestic investment, deepening UK capital markets, and helping more firms to scale and grow,” she added.
“It should also avoid measures that would undermine competitiveness or weaken incentives to invest. With the business tax contribution already at a record share of receipts, that means avoiding further sector-specific taxation, including on a banking sector already facing a higher tax rate than competing international financial centres.” General view of Canary Wharf in London (PA) Tory shadow chancellor Andrew Griffith said that “a raid on the financial services sector” would stifle growth just when the UK needed it. “Labour should be backing businesses and wealth-creators, not making their lives even harder,” he said.
A Treasury spokesperson said: “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.” Mr Healey has warned the public to be prepared for a tough budget on 28 October. He and prime minister Andy Burnham have promised to help families and businesses with cost-of-living pressures, even as the government’s borrowing costs have soared due to fears about inflation driven by the US-Israeli war on Iran . “It’s a tough time.
People can see the global economic conflicts, they know the pressure it’s putting on them, they understand it’s putting pressure on the government,” the chancellor told the BBC from an International Monetary Fund meeting in Bangkok on Thursday. He suggested government departments might not be given extra cash to cover pay rises for doctors and nurses. “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,” he said.
Meanwhile, the chancellor was criticised for an upbeat online video showing him and foreign secretary Ed Miliband tasting Thai snacks in a tuk tuk in the Thai capital less than two weeks before a challenging fiscal event.
Source: The Independent
