Finance minister John Healey said banks are central to Britain's economic future but kept tax decisions open ahead of his October 28 budget. A newspaper report said he was reportedly poised to tax banks, with reversing cuts to the bank surcharge among the options considered.
Healey said banks were “hardwired into the economic fabric” of Britain, but said he had decisions to take in the budget and that his comments were not a steer on tax changes. A newspaper report said he was reportedly poised to tax banks, with reversing cuts to the surcharge a possible option; it did not say whether a final decision had been made.
The bank surcharge is currently 3% on top of corporation tax and raises just over £1 billion ($1.3 billion) a year. Analysts have discussed restoring it to 8% or raising it by 2–3 percentage points. Banks argue they are already highly taxed, while UK Finance said an increase would weaken competitiveness, discourage investment and job creation, and work against the government's growth ambitions.
Healey said he intended to stay on course for deficit reduction in his first budget and meet the government's fiscal rules. He said he wanted the budget to provide some breathing space while reinforcing fiscal plans. British government borrowing costs last week reached their highest level since 1998.
