Labour is challenging chancellor Rishi Sunak to cancel a planned £1bn-a-year tax cuts for banks and use the cash to ease the blow of the cost-of-living crisis on working people.
An amendment to the Finance Bill being debated in the House of Commons on Wednesday would halt a planned cut from 8 to 3 per cent in the surcharge levied on banking profits over £25m from next year.
Instead, Labour says the estimated £1bn annual cost of the reduction could be used to fund home improvements for hundreds of thousands of families to soften the blow of energy bill rises expected to average around £700 from April.
The party’s Treasury spokesperson James Murray said the tax cut was coming at a time when bankers are widely expected to receive large bonuses, as investment bank profits have soared off the back of a wave of takeovers and mergers caused by the pandemic.
A separate Labour amendment urges the government to look again at the taxes and bills faced by working people, including the 5 per cent VAT levy on power and the planned 1.25 percentage point hike in national insurance.
Mr Sunak announced plans to cut the profit surcharge in last year’s budget, to soften the impact of a rise from 19 to 25 per cent in corporation tax on the same date.
The surcharge has raised £8.3bn since its implementation in 2016.
Figures obtained by Labour from the House of Commons Library showed that £1bn a year could provide solid wall insulation for 110,000 homes, cavity wall insulation for 1m homes, 380,000 new gas condensing boilers, the replacement of single with double glazing in 200,000 homes or the installation.
Mr Murray said: “People are worried about the future, with energy bills soaring and inflation at its highest in decades. But what are the Tories doing? They’re hiking up people’s taxes and ignoring the cost of living crisis.
“This unfair tax hike on working people shows how just how out-of-touch the chancellor is – and it adds insult to injury that it comes at the same time that he is pushing a billion-pound tax cut for banks through parliament.”
A Treasury spokesperson said: “The most recent Budget confirmed that banks’ overall corporate tax rate would rise to 28 per cent from 2023, up from 27 per cent currently, projected to raise over £4bn.
“We recognise the pressures people are facing with the cost of living, and are providing support worth around £12bn this financial year and next to help.
“The Health and Social Care Levy will provide a necessary, permanent source of funding to support the NHS and social care system, benefiting people across the country. It is progressive, with those earning more paying more.”
