Labour have uncovered another of the seemingly endless number of black holes in public finances they want to fill with yet more taxes.
Andy Burnham could be dolling out yet more grim taxes for the nation (Image: PA)
The Government is looking to raise more cash with a tax raid to plug a £4.7billion hole in public finances, reports suggest. The newly anointed Andy Burnham, who faces the Commons for the first time as Prime Minister on Wednesday, is expected to try and target oil companies and banks with a new tax.
The Treasury is reportedly stretched by rising gilt rates triggered by Donald Trump’s war with Iran while at the same time seeking cash to spend on defence in the face of a threat from Vladimir Putin’s Russia.
It’s reported that the Chancellor, John Healey, is keen not to repeat the mistakes of his predecessor. Rachel Reeves, who was pilloried for targeting small businesses and the general public with tax hikes.
Labour leader Andy Burnham will face the Commons as PM for the first time next month (Image: PA)
According to Bloomberg, one official said Mr Healey and Mr Burnham want to go after the “low-hanging fruit” of the banks and oil companies who have enjoyed substantial profits.
The Telegraph reports the Treasury has been hungrily eyeing BP profits which more than doubled during April and June because of soaring oil prices triggered by the Iran conflict. A “windfall tax” on British banking giants is also being considered.
A source told the paper Mr Healey is backed by Number 10. They said: “The Treasury position has never wavered – that there is less money to play with than we would like and we have to be really careful about spending taxpayers’ money.
“There is an inter-Whitehall war going on between those who have to make the sums add up and the rhetoric.”
UK Finance, the financial industry’s trade association, has warned against any “damaging” raid on the City.
Chancellor John Healey and Andy Burnham could be toasting more tax rises (Image: PA)
The new Chancellor ahead of his inaugural Budget faces official figures showing Government borrowing unexpectedly rose to £1.8billion last month.
The Office for National Statistics (ONS) said this was £700million or 68.7% higher than a year ago.
The hike came despite a record July for income tax receipts. Inflation also surged to a four-month high of 2.9% in July amid the fallout from the Iran war.
Experts, including the National Institute of Economic and Social Research (NIESR), have warned Mr Healey that he will need to either raise taxes or cut spending elsewhere as pressure on the public finances has left no room for extra borrowing.
A Treasury spokesman said: “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.”