John Healey is lining up a raid on Britain’s banks. As expected…
Wide Treasury briefings say he will reverse the 2023 surcharge cut to take it from 3% back to 8%. This from a chancellor who told the IMF in Bangkok that banks are the “jewel in the British economic crown”…
Bank taxes in Britain are already incredibly high – PwC puts the total tax rate for a model bank in London at 46.4% versus 27.9% in New York, 28.9% in Dublin and 38.9% in Frankfurt.
Crucially if just 7.4% of Britain’s internationally mobile banking business now leaves, a £2 billion tax rise will raise nothing at all and will actually be a cost. This is because losing 10% of mobile banking would cost £2.7 billion a year in tax, £5.8 billion in output, and 25,000 jobs. £700 million a year down the drain…
£24.1 billion out of banking’s £43.3 billion tax bill comes from employment taxes. The bank surcharge raised £1.2 billion last year. Which means if staff leave you lose much more in revenue…
In addition a study of 23 EU countries found bank levies were shifted mainly onto borrowers through higher lending rates. When Spain moved a mortgage tax onto banks, the rise in mortgage rates was largest for lower-income borrowers and those with fewer banks nearby.
Revolut, Monzo, Shawbrook, and other smaller challenger banks have already warned that a higher surcharge would hit mid-tier and specialist banks hardest. Which provide 60% of British lending to small firms – SMEs are set to take a big hit…
The main point is that even if a relatively small proportion of internationally mobile banking activity starts to shift out of the UK, the revenue consequences of an increase in the bank corporation tax surcharge could quickly become negative. Good luck…
Robert Jenrick on the Today programme:
“Can you now give a guarantee to your listeners this morning that no BBC presenter in the future will be exposed as a paedophile, as a number have been in the recent past? No, of course you can’t…”