IMF tells UK to look at pensions and welfare before taxing banks
The IMF said Friday that Britain should look for savings on pensions and welfare before it raises taxes on banks, The Guardian and Reuters reported. Finance minister John Healey is weighing a higher tax on bank profits in his Oct. 28 budget. The IMF said taxes are already about 40% of the economy.
The International Monetary Fund said Friday that Britain should look for savings on pensions and welfare, and reform property taxes and VAT, before raising taxes on banks, The Guardian and Reuters reported. The advice came as Chancellor of the Exchequer John Healey, Britain's finance minister, prepares his Oct. 28 budget, Reuters reported.
Helge Berger, deputy director of the IMF's European department, spoke at the fund's annual meetings in Bangkok, The Guardian and Reuters reported. Raising bank taxes was an option but should not be the first choice, the IMF said, according to Reuters. "We would not recommend increasing labour taxes," Berger said, according to Reuters.
Berger noted that taxes are roughly 40% of the economy, high by British standards, The Guardian and Reuters reported. He pointed to removing the "triple lock" and to better targeting of social benefits, The Guardian and Reuters reported. The triple lock ensures state pensions outstrip pay growth, Reuters reported. "I think that's where you would put the emphasis, rather than the tax that you mentioned," Berger said, according to The Guardian.
Healey kept the door open Thursday to raising a bank profit surcharge that brings in £1 billion a year, Reuters reported. The Guardian reported that he plans to raise more from the sector. Prime Minister Andy Burnham has said he will scrap the triple lock, but plans to use the savings partly to pay for more generous social care for the elderly, Reuters reported.
Banks are pushing back. UK Finance, the industry's lobby group, sent research to Healey suggesting that raising the surcharge to 8% from 3% would leave annual GDP £1.2 billion lower by 2029-30, The Guardian reported. The TUC union federation says the Treasury has lost £6 billion since the surcharge was cut in 2023, The Guardian reported. Britain's four largest lenders reported £29.2 billion in profits in the first half of the year, The Guardian reported.
What we know: The IMF said bank taxes should not be Britain's first choice and pointed to pensions and welfare.
What we don't: Whether Healey will raise the bank surcharge in his Oct. 28 budget.
Where outlets agree The Guardian and Reuters report that the IMF's Helge Berger pointed Britain to pension and welfare savings rather than a bank tax increase.
Where they differ The outlets cited here report the same key facts so far.