Adjustment of UK bank taxes shows divergence between fiscal and central bank positions

⑴ The UK Chancellor of the Exchequer, Healey, plans to increase bank taxes. This move may help alleviate the UK's strained public finances but could also lead to disagreements with Bank of England Governor Andrew Bailey.⑵ Healey may repeal a bank corporation tax surcharge reduction implemented by the previous Conservative government in 2023, when the surcharge rate was cut from 8% to 3%.⑶ If the previous rate is fully restored, it is expected to increase fiscal revenue by around £3 billion, equivalent to about $4 billion.⑷ Both Healey and Bailey attended the International Monetary Fund and World Bank meetings held in Bangkok this week.⑸ Reports of the possible tax hike emerged late Thursday night local time and made front-page headlines in several UK newspapers on Friday morning.⑹ Bailey, when asked about this proposal at the Institute of International Finance meeting on Friday morning, said this was not within his remit, he was not involved, and it was a matter for the Treasury.⑺ However, earlier this year, Bailey had warned UK policymakers that any measures to punish banks would ultimately only drive up mortgage rates and could threaten financial stability.