Labour is planning a bank tax raid as John Healey scrambles to raise funds ahead of his first Budget.
The Chancellor is considering a plan to reverse former Tory Chancellor Jeremy Hunt’s reduction in the surcharge banks pay on profits in an effort to raise revenue and keep the deficit under control.
The plans, which have backed by a union chief, are estimated to raise £2.25billion a year by increasing the surcharge to eight per cent, up from three per cent set by previous Conservative Governments, the Guardian first reported.
Trades Union Congress (TUC) general secretary Paul Nowak has backed the plans and urged the Chancellor to go further, up to 16 per cent, which the union says could raise £24billion in tax revenues over four years.
This week, the Institute for Public Policy Research recommended generating £1billion from a temporary surcharge on commercial banks’ windfall profits among a package of measures to raise an extra £16billion to help struggling households.
The think tank, which has been influential in Labour policy-making, said the proposals would help rebuild the Chancellor’s fiscal buffer which it estimated has dropped by up to £15billion since the spring.
But both the Tories and City groups have warned targeting banks would stifle investment, with Louise Hellem, chief economist at the Confederation of British Industry, saying Labour must avoid plans which “undermine competitiveness or weaken incentives to invest”.
Shadow Chancellor Andrew Griffith said: “Britain needs growth. But a raid on the financial services sector will stifle it.
“Labour should be backing businesses and wealth-creators, not making their lives even harder.”