City bodies urge Chancellor Healey not to raise bank taxes in 28 October Budget

Mixed · 2Leaders of major City and business bodies have written to Chancellor John Healey urging them not to raise taxes on banks in the autumn Budget, warning that it could drive business and capital out of the UK. 1 2 Mixed · 2Signatories include David Postings of UK Finance, Rain Newton-Smith of the CBI, Miles Celic of TheCityUK, Chris Hayward of the City of London Corporation and Adam Farkas of AFME. 1 2 Centre · 1The letter says the financial services industry already faces a higher tax burden than key international competitors, and that a higher burden may not raise more revenue if capital, people and businesses move elsewhere. It adds that higher taxes could reduce the availability of finance and protection for households and businesses. 2

Right · 1City A.M. reports PwC figures putting total taxes on UK banks at 46% of profits, against 42% in Amsterdam, 39% in Frankfurt and 29% in Dublin. It says the letter asks for a commitment not to increase the bank levy or surcharge or impose new bank taxes, similar to the certainty given to other sectors through the Corporate Tax Roadmap. 1 Mixed · 2Banks currently pay a 3% corporation tax surcharge plus the bank levy, which is charged on certain equities and liabilities on their balance sheets. City A.M. says some have suggested the surcharge could return to 8%, while other lobbyists want a windfall tax. 2 1 Right · 1City A.M. links the speculation to pressure on public finances, saying economists forecast that the £23.6bn of headroom left in the Spring Statement could have been cut by half because of higher borrowing costs after the US-Iran war. It also says some banks have raised income forecasts on expectations of higher-for-longer interest rates. 1

Centre · 1Healey met the chiefs of the biggest banks and building societies this week; reports said no guidance was given on bank taxes. The Treasury said it does not comment on "speculation, rumour and proposals". The Budget is due on 28 October. 2 Right · 1Other voices have joined the lobbying: former Chancellor Jeremy Hunt, who cut the surcharge in 2023, warned this week of less investment, lower growth and fewer jobs, and Citi's Jane Fraser said in August that "money votes with its feet". City A.M. says JP Morgan's Jamie Dimon spoke to Healey in August. 1 Centre · 1On the other side, the Trades Union Congress, which represents unions with about 5.3 million workers, has called for the surcharge to rise to at least 8%, which it says would raise £9bn over four years to help households with the cost of living. The Evening Standard reports that Healey's stated priorities are "breathing space" for families and businesses and "growth in every postcode", while meeting the fiscal rules. 2