The Confederation of British Industry (CBI) has issued a warning to Chancellor John Healey, stating that a proposed increase in the bank surcharge on corporation tax would be detrimental to the United Kingdom's economy.
In a pre-Budget appeal, CBI chief Rain Newton-Smith argued that the move would harm Britain's global competitiveness. Healey is widely expected to raise the bank surcharge, which currently stands at 3 percent. Proponents of the tax hike suggest that financial institutions can afford to contribute more, especially as rising interest rates boost their profits and the government seeks funds for cost-of-living support measures.
However, the industry contends that it already faces a higher tax burden compared to financial centers in Frankfurt and New York. Newton-Smith highlighted that while London is the heart of the UK's financial services sector, the industry supports over 650,000 jobs across the country and contributes more than £200 billion annually to the economy.
"We want our strongest sectors to keep getting stronger – because that is where growth comes from," Newton-Smith stated. "Our financial sector already faces a higher tax burden than other global centers. Adding to that would be an own goal for our competitiveness. The Budget next week must be about giving business breathing space and backing wealth creation."