Chancellor John Healey is reportedly considering policies for windfall tax on banks and oil companies in his first Budget, as speculation grows over ways he can tackle a gaping black hole in public finances.
Both options are being assessed as a way to plug a £4.7bn gap, while protecting the general public from higher taxes, according to a report byThe Telegraph.
It says that the decision is being pitched as a subdued choice to ensure tax rises are lower than under his predecessor Rachel Reeves.
The windfall tax is a policy that applies to businesses making an unexpected profit.
Earlier this month JP Morgan boss Jamie Dimon personally warned Mr Healey against a move for the windfall tax on banks, stating that the decision could drive jobs elsewhere, drawing parallels with New York.
Meanwhile, Scottish first minister John Swinney had urged prime minister Andy Burnham to scrap the tax on oil companies, which is set to remain at 38 per cent until at least 2030, after BP announced it would be selling its North Sea operations.
But Mr Healey, who will announce his Autumn Budget on 28 October, is said to be considering options including increasing the tax on oil and gas giants, extending the levy beyond 2030, and imposing a time-limited tax on bank profits similar to those imposed on energy companies.
It would come after BP’s profits more than doubled between April and June following the US-Iran war as oil prices soared.
A Treasury spokesperson told The Telegraph: “The Chancellor is fully focused on his priorities, which will boost business, help with the cost of living and support people in every postcode.
“As has always been the case, decisions on tax are a matter for the Chancellor to set out at fiscal events, rather than routinely commenting on proposals made.”
Former prime minister Rishi Sunak also faced pressure to increase the windfall tax on oil companies after Shell recorded the highest profit in its 115-year history due to soaring oil prices following Russia’s invasion of Ukraine.
Meanwhile, Green Party leader Zack Polanski promised that his party would enforce a windfall tax on banks to end “rip-off Britain”. He said that the Greens would enforce a 38 per cent levy on domestic profits above £800 million for the country’s biggest banks.
The party calculated that this policy would raise an additional £19bn citing analysis by campaign group Positive Money, which would be diverted to help small businesses. It claimed that the tax would cover windfalls enjoyed by banks as a result of higher interest rates and at the “expense of the British public”.
A spokesperson for Mr Burnham said earlier this month: “The Greens have stood in the way of many of Labour’s changes, instead offering unrealistic solutions or unfunded spending pledges.”
