Two separate outlets report that John Healey plans to raise taxes on banks in the coming Budget. The Guardian's business live blog on Friday morning said he was poised to increase the levy on lenders, and a second report carried the same claim under the headline “UK's Healey Plans to Raise Bank Taxes”. A third headline described a “Budget bank tax raid”, and all three rest on the same underlying reporting. None of the reports gives a figure, a mechanism (a profits surcharge, a balance-sheet levy or changed loss-offset rules) or a date for the change. The Treasury has not confirmed the plan on the record in anything we checked. The FTSE 100 closed on Friday at 10,881.9, up 0.38 per cent.
Banks are profitable, concentrated in a few large firms and short of public sympathy, which makes them an easy source of revenue when public finances are tight. The industry's standard reply is that a bigger bill means less lending and wider margins and fees for customers, so the cost may not stay with shareholders.
You are unlikely to pay the tax directly, since it would fall on company profits rather than current accounts. After the Budget, watch your savings rate and mortgage pricing, and check how much of your pension or tracker fund is held in bank shares.
A headline with no number is a trial balloon, and the City will spend the weeks before the Budget arguing the cost back onto customers. The sharpest open question is which of the possible mechanisms is chosen, because that decides who really pays.
Guardian business live; second outlet headline “UK's Healey Plans to Raise Bank Taxes”
Healey set to raise taxes on banks in the BudgetHealey set to raise taxes on banks in the Budget
Two separate reports say the next Budget will include a tax rise aimed at the banking sector, but no figures have been confirmed.
John Healey is preparing to raise taxes on banks in the forthcoming Budget, according to two separate outlets. The Guardian's business live blog on Friday morning said he was “poised” to increase the levy on lenders, and a second report carried the same line under the headline “UK's Healey plans to raise bank taxes”. A third headline in circulation described a “Budget bank tax raid”. Each of these rests on the same underlying reporting, so the claim is best read as a strong signal rather than a confirmed policy.
What is missing matters as much as what is there. None of the reports we could check gives a firm figure for how much extra money would be raised, whether the change would come through a higher surcharge on profits, a new levy on balance sheets, or a change to the rules on how losses can be offset. Nor has the Treasury confirmed any of it on the record. Until the Budget statement is delivered, the numbers should be treated as unverified, and the final package could look quite different.
The politics are easier to read than the detail. Chancellors of both main parties have found banks an attractive target when public finances are tight, because the sector is profitable, concentrated in a handful of large firms and unlikely to win much public sympathy. The counter-argument, which the industry makes every time, is that higher taxes reduce lending, push investment towards rival financial centres and are ultimately passed on to customers through wider margins and fees. The City will be listening closely for which of those arguments the government decides to engage with.
For ordinary readers the direct effect is modest. Most people hold no shares in a bank except through a pension fund or tracker, and the tax would fall on company profits, not on current accounts. The indirect effect is harder to call. If lenders respond by trimming savings rates or tightening mortgage pricing, households would notice. If they absorb the cost, shareholders would. Friday's market moves gave little away: the FTSE 100 closed at 10,881.9, up 0.38 per cent.
What to watch: any Treasury briefing before the Budget, the reaction of bank shares on Monday, and whether trade bodies publish their own estimates of the cost. Those would turn a headline into something checkable.
By the numbers
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BudgetPublic financesThe Chancellor's annual statement of tax and spending changes.