Chancellor John Healey has reportedly received a proposal to implement further taxes on oil firms and banks. This consideration comes as companies in these sectors have reported substantial profits.
Reports suggest that Mr Healey may consider these taxes at this year’s Budget. The aim is to help restore a partly-eroded £22.7bn fiscal buffer and to meet spending commitments for defence and the cost of living.
Bloomberg has reported that Treasury officials believe windfall taxes on banks and oil companies could be a straightforward way to increase government revenue. However, industry figures, including Citigroup boss Dame Jane Fraser, have reportedly cautioned against a new banking tax, with UK Finance officials also writing to the Chancellor to highlight risks to the financial services sector.
Mr Healey is tasked with securing an additional £4.7bn in government revenue over four years for the defence investment plan, alongside finding £10bn in cuts across departments. Economists suggest his fiscal buffer may have diminished, with the Resolution Foundation estimating it could be as low as £8bn.
City economists do not anticipate significant departures from the previous government's economic plans in the Budget on 28 October, with large increases in public spending or further borrowing not expected.