Comprehensive foreign media reported on the 19th that Jeremy Hunt, the new British Chancellor of the Exchequer, is preparing to use the profits of banks and energy companies to fill a fiscal gap of 40 billion pounds by raising taxes and cutting public spending.
Hunt’s budget, due to be unveiled on October 31, is expected to include a big tax hike, and his allies say they expect him to target the earnings of banks and oil and gas companies, according to the Financial Times’ Chinese website.
Banks are expected to profit handsomely from higher interest rates, including overnight reserve requirements at the Bank of England, and higher margins on lending, according to reports.
Hunter has said he is not against a windfall tax “in principle” and he is weighing the level of tax that should be levied on banks.
At this level, the Treasury is expected to collect an additional £500m a year from banks, although the figure will be higher if profits grow strongly.Hunter confirmed on the 17th that corporate income tax will rise to 25% in April next year; he has not yet decided whether to retain the 8% bank surcharge, which will bring the industry’s effective tax rate to 33%.
Meanwhile, Hunter may extend the government windfall profits tax on oil and gas producers until 2025, helping the next parliament fill a fiscal hole, according to people familiar with his thinking.
The current tax package plans to increase at least £28 billion over the next three years until it ends in December 2025. A two-year extension could raise more than £10bn for the Treasury, but much depends on future energy prices.
Meanwhile, Hunter said at a cabinet meeting on the 18th that ministers would have to strictly control spending.He is trying to prove to financial markets that he can control Britain’s deficit.
All government departments in the U.K. have been asked to save money, and spending outside the Ministry of Health and Defense is expected to be reduced, accounting for 15 percent of the budget cut, Bloomberg reported, citing people familiar with the matter.
According to the British Broadcasting Corporation (BBC), if the government is to fulfill its commitment to break even within the next three years, the existing plan still has significant shortcomings.
Hunt announced plans to spend around £60bn this winter to support paying UK households’ energy bills until April next year, but then scale back the scheme to save money.
Hunt also said he was forming a council of economic advisers to provide “independent expert advice” to help rebuild investor confidence.
Source: China News Network
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