Banking, Tax And Spending, Rishi Sunak, Budget

Banking, Tax And Spending

Sunak to cut tax on banks to keep City competitive, say reports

Sunak to cut tax on banks to keep City competitive, say reports

10/20/2021 2:06:00 PM

Sunak to cut tax on banks to keep City competitive, say reports

Chancellor said to be planning to slash corporation tax surcharge from 8% to 3% from April 2023

Last modified on Wed 20 Oct 2021 12.03 BSTRishi Sunakis preparing to announce a tax cut for Britain’s biggest banks at next week’s budget to maintain the competitiveness of the City of London after Brexit, according to reports, despite plans to raise taxes on workers.

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Ahead of the setpiece budget and spending review next week, the Financial Times said the chancellor planned toslash the corporation tax surcharge imposed on the banking industry by more than 60%, taking the levy from its current level of 8% to just 3% from April 2023.

The development comes after Sunak had warned the Tory party conference this month that the time for tax cuts would need to wait until the public finances are placed back on a sustainable footing, amid record levels of government borrowing incurred during the Covid-19 pandemic.

Since the start of 2021, the chancellor has announced plans to raise taxes by £36bn a year – a bigger rise than at any budget since the mid-1970s – including plans to raise national insurance taxes on workers and businesses.It also comes after the government

slashed universal credit benefits from early October by more than £1,000 a yearin the biggest ever overnight cut for social security benefits, in a development poverty campaigners warn will push more households into distress amid an unfolding cost of living crisis this autumn.

The chancellor announced a review of the banking industry surcharge at the spring budget, saying a planned increase in the main rate of corporation tax could put London at a disadvantage to other big financial centres such as New York and Hong Kong.Corporation tax is set to rise from the current rate of 19% to 25% from April 2023, which the Treasury said at the March budget “would make UK taxation of banks uncompetitive and damage one of the UK’s key exports”.

It comes amid concerns over the impact of Brexit on the City of London as large amounts of financial business continue to steadily drift to European financial centres, as well as to Asia and the US. Earlier this year, it emergedAmsterdam had overtaken London as Europe’s top share trading hub

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, raising questions over the future of the City and its contribution to the wider UK economy and the British exchequer.The chancellor’s critics leapt on Sunak’s comments to the Tory party conference earlier this month, amid anticipation for a tough tax and spending settlement elsewhere at next week’s budget.

John McDonnell, the former shadow chancellor, said: “Sunak talked about morality in his conference speech, where’s the morality in cutting universal credit forcing more children into poverty whilst reducing the taxes on wealthy banks? Appalling judgement.”

Despite improvements over the past year as the economy recovers from Covid, the government is still on track to borrow £180bn in the current financial year, or about 7.7% of national income. Since the second world war, such a level has only been reached during the financial crisis and last year.

The banking surcharge was introduced by George Osborne in 2015 with the aim of ensuring a fair contribution from the banking industry after the then chancellor scaled back a separate levy on lenders’ balance sheets, and cut corporation tax for other firms to among the lowest levels in the western world. The levy raised £1.5bn in 2019.

Against the backdrop of heavy lobbying from the sector, Sunak dropped a heavy hintthat a fresh settlement was likely, saying that his ongoing conversations with banks had “only reinforced my view that the combined tax rate on UK banking profits should not increase significantly from its current level”.

A Treasury spokesperson said: “We do not comment on fiscal policy outside of budget.” Read more: The Guardian »

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I saw a great tweet the other day: Our global problem is that we dont lack the resources to feed and satisfy the poor but we dont have enough resources to satisfy the rich I thought the bankers were doing well enough by laundering smuggled money. Cutting UC, we have to find money from somewhere; cutting bank taxes 👍

Quelle surprise ! Who would have seen this coming ? It's like the ol' boys have a club/network or some sort of agenda that is invisible to Muppets... reminds me of the final blackadder scene in Sunak you’re like Robin Hood but backwards. A R S E H O L E All BS , tax the poor and look after the rich , Sunak going for a partnership with Goldman after his term in office

The interests of the ruling class will always be opposed to the interests of the ‘ruled’. Cut tax on banks, huh 🤔 🙄 doesn't seem as the right approach but what do I know. I have no Goldman Sachs experience nor hedge fund, but I have common sense to know when the fox guarding gate allows couple hens go missing.

More hand-outs for the rich. Typical. 🤣🤣🤣🤣. Rasing taxes for people while cutting for banks. Yes, this government has their priorities quite straight forward.

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