In the United Kingdom the bells ring to impose additional taxes on banks

In Italy, following the government’s decision to impose additional taxes on banks, calls are mounting for banks to take a similar step in the UK, known as the center of global banking.

After the Italian government announced earlier in the week that it would impose an additional 40 percent tax on excess profits from banks’ high interest rates, the country’s top banks lost nearly $10 billion in value in just one day. .

Following the decision, which became known as “the decision that interrupted the pleasure of the beach” in the markets, the Italian government made another statement that would reassure the markets, announcing that the application of the additional tax would not exceed 0.1 percent. percent of the banks’ total assets.

THE TAX PRESSURE WILL INCREASE

Although the Italian government’s latest statement on the markets is seen as a “reversal”, it is possible to say that the additional taxation for Italy’s banking sector this week actually opened Pandora’s box, and the beginning of a period in which the tax burden on the banking sector will increase due to high profits.

After the Italian government’s decision to impose additional taxes on the banking sector, voices began to rise in the UK, which runs the global banking sector, for a similar decision.

In addition, for now, there is the possibility that the voices of the opposition will become government actions after the general elections to be held next year.

For example, Labor Party MP Beth Winter, who is in opposition in the country, said in a statement on the X social media platform: “Italy followed Spain by imposing an additional tax on bank profits after they increased Interest rates. The UK government should consider doing the same instead of imposing tax breaks on banks. Banks should pay taxes and the salaries of public employees should be increased due to the increase in the cost of living, instead of bank speculation. she performed her assessment.

’40 PERCENT ADDITIONAL TAX PROVIDES AT LEAST $24 BILLION IN STARS’ REVENUE’

Simon Youel, Head of Policy at Positive Money, one of the UK’s leading non-governmental organisations, argued that an additional tax should be imposed on banks in the UK, similar to the one in Italy, in his social media post. . X platform.

“In terms of bank profits, the 40 per cent surcharge (in the UK) would generate at least £24bn in revenue from the big four banks alone,” Youel shared. he performed the assessment of it.

Youel estimated that if a 40 per cent surcharge were imposed on banks in the UK that have achieved high levels of profitability due to interest rates, this would generate an extra £700 per household.

In November last year, Charlie Bean, former deputy governor of the Bank of England (BoE), argued that additional taxes should be imposed on the country’s banks and that this could save tens of billions of pounds in the treasury.

‘HIGH PROFIT BANKS ARE SLIGHTLY COMING TO DEPOSIT INTEREST’

Last week, the Bank of England (BoE) announced that the policy rate was increased by 25 basis points to 5.25 percent. Thus, the policy rate reached its highest level in the last 15 years. However, it is claimed that banks, which increase their profits in the high interest rate environment in the UK, even insist on raising these high interest rates on their customers’ deposits.

Last month Britain’s supervisory agency, the Financial Conduct Authority (FCA), warned that it would take action against banks whose policy interest rates were low or lagging on depositors’ accounts.

On the other hand, it is also known that the Conservative Party, which has been in power in the country for the last 13 years, refrained from making decisions that would put banks and institutions in the London financial center in difficulties.

In a statement to The Guardian newspaper from the UK Treasury, it was noted that the UK government has imposed two different taxes on banks (bank tax and bank corporate tax surcharge) and no new one is planned.

“The UK banking sector generated around £39bn in tax last year, which is almost enough to fund the entire police and judicial system,” the statement said.

ERNST&YOUNG: THE ADDITIONAL TAX IS NOT POSSIBLE

Ernst & Young Item Club’s chief economic adviser, Martin Beck, who gave an assessment to the AA correspondent, claimed that after the increase in bank profitability in 2016 in the UK, there is still the practice of paying additional tax of 3 percent on their profits on top of the 25 percent corporation tax.

“I think the UK is unlikely to follow Italy’s example and impose additional taxes on banks. There has been no lead (yet) from the government,” she said.

Despite resistance from the UK’s ruling Conservative Party, it is emphasized that interest rates are at the highest level in 14 years and the cost of living is reliving the 1970s, while the public is spending for a difficult period due to rising home loan interest rates, food prices and declining income levels.

THE NET PUBLIC DEBT REACHES 100.1 PERCENT OF GDP

In the country hosting general elections in May 2024, the opposition is targeting the balance sheets of giant banks with billions of dollars in profits rather than the austerity program to shoulder the financial burden.

The country’s net public debt reached 100.1 percent of Gross Domestic Product (GDP) in May and exceeded 100 percent of GDP for the first time since March 1961.

The UK’s Office for Budgetary Responsibility (OBR) also warned last month that government debt could reach 300 percent of gross domestic product (GDP) in 50 years as borrowing mounts due to high interest rates. . (AA)