Kemi Badenoch is expected to fire a bank tax warning shot to the Labour government on Thursday during a visit to Edinburgh.
The Conservatives will warn Andy Burnham against “bending the knee to left-wing backbenchers and trade union paymasters,” as the pre-Budget debate heats up.
It follows the banking sector swinging into defence mode ahead of the Budget as speculation ramps up that the industry will be targeted for a cash raid.
Last week, top City chiefs wrote to Healey cautioning that hiking taxes on banks could drive businesses out of the UK.
The Chancellor met bank bosses last week, but stayed tight-lipped on tax policy. He is understood to have warned sector chiefs the UK was facing a “challenging” fiscal picture.
Shadow chancellor Andrew Griffith said: “Britain needs growth. But a raid on the financial services sector will stifle it. Labour should be backing businesses and wealth-creators, not making their lives even harder.
“Rather than hiking taxes yet again, Labour should cut spending. Conservatives are the only party that will cut the welfare bill, cut the deficit, cut taxes and get Britain working again.”
Tories to warn bank tax will dent competition
The industry has warned that banks already face an outsized tax rate when compared with competitors overseas. Figures from PwC show total taxes on UK banks amount to 46 per cent of profits, compared to 42 percent in Amsterdam, 39 per cent in Frankfurt, 29 per cent in Dublin and 28 per cent in Dublin.
Banks in the UK are subject to a sector-specific surcharge of three per cent that sits on top of corporation tax. Some have suggested the surcharge could be returned to eight per cent as a way to raise revenue from banks, but other lobbyists have called for Healey to go further with a windfall tax.
Top banking figures have vocalised opposition to any targeting of the sector. JP Morgan boss Jamie Dimon met John Healey last month ahead of the Chancellor’s first Budget. In a phone call in August, the American banker is understood have emphasised the importance of “getting public policy right”.
Dame Jane Fraser, a Scot credited with turning around Wall Street’s Citibank, said she was “concerned” at another charge on banks in Britain.
The Conservatives are expected to warn any increase to the rate on banks would make the UK an even less competitive place for global finance.
Badenoch revealed her plans for a blitz of banking regulation earlier this year, which include ditching ring-fencing, scrapping the Financial Ombudsman Service and bringing in mandates around capital buffers.
“London is having its lunch eaten” by overregulation, the Tory leader said in a City speech in June as she proposed a shakeup of the financial regime. The Tories said the reforms would pump £450bn into the UK economy.