Marra urges bank tax rises as critics warn mortgage borrowers may pay the price
Scottish Labour leader Michael Marra has urged Chancellor John Healey to raise taxes on major banks in the Budget, arguing that their high profits make a further contribution fair. The proposal has drawn warnings that banks could pass the extra costs on to mortgage holders.
Marra said the biggest banks made around £15 billion in the first half of the year and called for a progressive approach to funding public services. Shadow chancellor Andrew Griffith said higher bank taxes could push up already high mortgage rates, while former cost-of-living tsar Richard Walker cautioned against further business taxes. Barclays reported quarterly pre-tax profits of £2.3 billion, up 12 per cent year on year, and said it plans to cut 5,000 jobs.
In short
- Marra wants banks to pay more tax in the Budget.
- Critics warn the levy could raise mortgage costs.
- Barclays made £2.3 billion in quarterly pre-tax profit.
Steelman: both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Large banks have made substantial profits, so a higher tax could ask institutions with significant capacity to contribute more towards public services. Supporters may see this as a fairer way to raise revenue than placing more of the burden on households, provided the tax is designed to limit unintended effects.
The case against
Banks may respond to higher taxes by raising fees or lending rates, or by reducing lending, which could leave mortgage borrowers and businesses bearing some of the cost. Critics argue that adding taxes on businesses risks worsening borrowing costs and weakening investment or employment, especially when households already face high mortgage rates.
Explained simply
Banks take deposits, lend money and provide services such as mortgages. Their profits can rise when they earn more from lending and other activities than they pay out in interest and costs; large UK banks have recently reported substantial profits.
The UK Government sets taxes on banks, and the Chancellor announces tax changes in the Budget. Scottish Labour leader Michael Marra is among those arguing for higher bank taxes to help fund public services, while critics including Shadow Chancellor Andrew Griffith say banks might respond by charging customers more, including through mortgage rates.
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Originally published by Daily Mail as “New Scottish Labour leader Marra tells Healey to hammer bank profits in the Budget amid warnings move could push up mortgage costs”.