City of London calls for tax reform, lobbying pressure to seal trade deal

City of London calls for tax reform, lobbying pressure to seal trade deal

London

2 minutes

12:06 today

Overall tax rates for UK banks are uncompetitive, says TheCityUK – government should also expedite trade deal with Switzerland

The City of London has set priorities ahead of the government’s 17 November economic package, putting tax and trade reforms on the financial industry’s wish list.

According to TheCityUK lobby group’s report, the total tax burden (including corporate tax, industry surcharges and other charges) on UK banks is 44.9%, significantly higher than New York’s 29.4% and Dublin’s 30.2%. “The UK bank tax needs to be reformed,” the report said, and the government “needs to reconsider the bank surcharge situation as well.”

Rishi Sunak’s government calls for £50bn (€57.3bn) of spending cuts and tax increases, with growing calls for a “simplified, streamlined, stable and predictable tax regime for financial services” . This includes raising more money from inheritance taxes.

Finance Minister Jeremy Hunt said the corporate tax rate will rise to 25% from April. Banks now charge him 8% surcharge on profits. Unless Hunt lowers the surcharge, the lender will be taxed from his current 27% to his 33%. They also pay an annual levy on certain balance sheet liabilities. This will see him raise £1.3bn (€1.5bn) in this tax year.

UK banks have been paying additional taxes for over a decade, reflecting the support taxpayers received during the 2008 financial crisis. Rising interest rates are expected to boost profits in their lending sector, potentially making them, along with the country’s oil and gas giants, an attractive target for a windfall tax.

The lobby group also indicated other priorities, such as regulatory reform and speeding up trade deals with other financial centers. The government should “quickly finalize” the pending deal with Switzerland and use it as a model to secure trade with other major financial centers such as Japan and Singapore.

attracting force

The report said the proposed introduction of ministerial powers to overrule regulators on issues of important public interest “should be strictly defined and used as a last resort.” “The operational independence of the UK regulator is a key factor underpinning the UK’s competitiveness in financial services. It is important that we continue to have faith.”

The government is considering introducing a so-called call-in power to the Financial Services and Markets Bill, which gives ministers the power to overrule regulators. But regulators warn it could undermine their authority.

Other recommendations in TheCityUK’s plans include:

Building capital market connectivity by implementing regulatory reforms including ring fencing, fintech and wholesale markets to enhance the UK’s position as a hub for digital assets and securing a UK-US Digital Economy Agreement trying to establish a cross-list link with India to

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