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Customers, Not Banks, Will Pay for Higher Taxes
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21, October #CostOfLiving, #BrokenSystem, #TrendShock

Customers, Not Banks, Will Pay for Higher Taxes

In its first budget, the new government has targeted the banking sector and prepared another tax increase for it. The public has reacted negatively to this way of plugging holes in public finances.

As part of the new budget, Chancellor John Healey intends to increase the surcharge banks pay on their profits in addition to corporation tax from 3% to 8%. According to Treasury estimates, this will raise more than £2 billion a year.

JP Morgan CEO Jamie Dimon previously warned that if taxes were increased, the bank would abandon plans to build a new £3 billion headquarters in London. The building was intended to accommodate more than half of the 23,000 employees at the bank's UK operations. Other bankers have warned that higher taxes could lead to job cuts and the relocation of some business activities to countries offering more favourable conditions.

The Tax Will Hit Everyone

Financiers are not the only ones unhappy with John Healey's initiative. Conservative Party leader Kemi Badenoch recalled that Labour had already raised taxes on jobs to make businesses pay more. As a result, those very jobs were lost and pay rises were reduced.

''Now Labour want to tax the banks because it looks like an easy way to raise money, doesn’t it? But banks lend money to people buying homes and businesses creating jobs. Millions of people’s pensions are invested in them too. Higher taxes mean a smaller pension for you, less lending and less investment, meaning fewer jobs and ordinary people paying the price again. Labour can’t act shocked when this happens - they have been warned'', - the politician warns.

Economist James Moore stresses in an opinion article for The Independent that “a windfall tax on banks could hit us all”. It will not be wealthy shareholders who pay the price, but ordinary customers. They face tighter lending conditions and higher costs for all types of loans, particularly mortgages.

Even non-experts can clearly see the negative consequences of higher taxes.

''A bank tax is economic stupidity. Punish banks for making profits and it means less lending & higher borrowing costs. As ever businesses and families will ultimately pick up the bill. The country can’t afford more punitive taxes and anti business posturing!!'' – writes blogger Bella Wallersteiner.

Labour Does Not Want to Cut Spending

Experts and ordinary social media users agree on one thing — instead of raising taxes, Burnham's government needs to cut unnecessary spending.

''And don't get me started on Quangos. We spend approximately £400 billion pa on over 400 quangos. This is about a third of all spending. Instead of halting or reducing this ridiculous cost, this government created 27 new ones in their first eight months in power - a record! A modest 5% cut which could probably be achieved through natural wastage, would produce a saving of £20 billion. You thought @Keir_Starmer & @RachelReevesMP were bad. You haven't seen anything yet with @andyburnham & @JohnHealey_MP'', - writes London resident Diana Harding.

Despite public dissatisfaction, John Healey has no intention of abandoning his plans to raise taxes. After all, even the IMF has urged him to “stay the course”. Apparently, the Fund's approval matters far more to Labour than the well-being of its own citizens.

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