The new leader of Scottish Labour today told John Healey to hammer bank profits in the Budget despite warnings that doing so could increase the cost of mortgages.
Michael Marra, who has been in charge little more than a month, urged the Chancellor to make a ‘progressive choice on tax’ when he unveils his economic plans on Wednesday.
Mr Healey is set to levy billions of pounds in extra taxes on the big banks as he scrambles around for cash, arguing the raid on the heavily-taxed sector is justified by bumper profits.
Mr Marra, who replaced Anas Sarwar in September, accused banks of profiting from high mortgage rates to take the money off people who are ‘struggling to afford to turn up the heating’.
He said: ‘Labour governments should make progressive choices on tax. Labour has already asked the wealthiest and richest to pay more – taxing private jets, private schools and private equity to raise revenue for public services like our NHS.
‘Our financial services sector is strong and internationally competitive, so much so that in the first six months of this year the biggest banks have made around £15 billion of profits.’
But it came as opposition figures warned the tax raid could have the opposite effect to that intended.
Michael Marra, who has been in charge little more than a month, demanded the Chancellor make a ‘progressive choice on tax’ when he unveils his economic plans on Wednesday
Mr Healey is set to levy billions of pounds in extra taxes on the big banks as he scrambles around for cash, arguing the raid on the heavily-taxed sector is justified by bumper profits
Shadow chancellor Andrew Griffith yesterday told Times Radio: ‘It sounds great, doesn’t it, putting up taxes on banks? But what does that mean? It means mortgage rates which are already extremely high will have to increase to compensate banks for that higher level of tax.’
Labour’s former cost-of-living tsar Richard Walker also warned against another tax raid on business, including banks.
Barclays last week reported pre-tax profits of £2.3billion, an increase of 12 per cent on the same quarter last year.
The figures came alongside the announcement that it was planning to cut 5,000 staff this year, or about 5 per cent of its total workforce, as part of cost savings across the bank.
Chief executive CS Venkatakrishnan said tax hikes would be ‘bearable’.
Lloyds Banking Group, HSBC, NatWest Group and Santander will report their third-quarter financial results this week.
This morning it emerged the Government could protect the poorest pensioners from income tax in the Budget on Wednesday.
John Healey reportedly plans to raise their income tax threshold to £13,036, matching the full new state pension rate from next April.
Those relying on just the state pension had been set to pay income tax on it for the first time, as the annual amount would breach the income tax threshold of £12,570.
The new tax-free allowance for people who rely solely on the state pension is expected to rise in line with the headline annual payment for the rest of this parliament, meaning they won’t pay tax until at least 2029.
Full details are yet to be announced, but those who earn even £1 in private pension above their state pension look set to be excluded from the new tax rate.
For these people, and everyone else, the threshold at which they start paying income tax will remain at £12,570.
The scheme, which would cost £200million a year by 2030 according to a report in The Times, could create messy ‘cliff edges’ and be seen as unfair by those who did ‘the right thing’ and saved for old age, say pension industry experts.
