Treasury Vs Banks Face Unexpected Taxes As Industry Bosses Push For Higher Taxes On Industry
Showdown: Chancellor Jeremy Hunt
A showdown between the government and banks is imminent as industry bosses push for higher taxes on the sector.
As Rishi Sunak and Jeremy Hunt look to plug a hole in the country’s finances, banks have emerged as a possible target.
The prime minister and the chancellor want to keep the 8 percent bank surcharge, even after the corporate tax rate goes from 19 percent to 25 percent next April. This would push up taxes on bank profits to 33 percent.
When Sunak was chancellor, he promised to lower the surcharge to 3 percent, so that when corporate taxes rose to 25 percent, the banks would pay 28 percent.
Another option would be to tax profits that lenders make on money stored at the Bank of England.
But NatWest boss Alison Rose said: ‘Banks in the UK already pay a significant amount of tax, more than any other industry and more than any of our colleagues in other locations around the world.’
She added that “consistency and certainty” in tax and regulation was needed, but admitted that a windfall was “ultimately a decision for the government.” Earlier this week, HSBC chief executive Noel Quinn rejected suggestions that banks should temporarily pay more taxes to help fill the gap in Britain’s finances.
“I would hope there is no windfall tax, but that is a matter for the chancellor to decide,” he said.
Barclays boss CS Venkatakrishnan has warned that higher levies on banks could hurt competitiveness.
He said a “predictable tax regime” was key to London’s success as a global financial center.