slashing the corporation tax surcharge imposed on Britain’s biggest banks, a move which he is set to announce at this week’s budget. According to the Financial Times, Rishi Sunak is expected to unveil a tax cut of over 60 per cent on the banking industry, bringing the levy to just 3 per cent from April 2023, from the current level of 8 per cent.
Since the beginning of this year, the chancellor has announced plans to increase taxes by £36bn a year, the biggest rise in any budget for decades. However, the financial sector may not be expected to contribute to this plan, as any increase in the main rate of corporation tax could put London at a disadvantage to other big financial centres like Hong Kong and New York, according to Sunak.
The development follows a warning by the chancellor to the Conservative party conference this month, that Whitehall may have to wait until the public finances were back on a sustainable footing before announcing tax cuts, as the government continues to maintain record levels of borrowing incurred during the pandemic. Although United Kingdom’s economy has been recovering from the worst effects of the global health crisis over the past year, the government is still on track to borrow £180bn in the current financial year, a level which has only been reached during the financial crisis since the Second World War.
