JP Morgan slams Healey for bank tax hike that ‘lacks principle’
JP Morgan has slammed the Labour government for raising taxes on the UK banking sector and said the move “lacks principle”.
Wall Street’s biggest bank, which serves over 2.5m UK users through its retail arm Chase, said it is “committed” to the UK but raised concern over the targeting of the sector in John Healey’s first Budget.
“To single out this industry for additional taxes again, one of the UK’s biggest generators of growth and jobs, lacks principle,” a spokesperson for the bank said.
“It also overlooks that the banking industry operates in a highly competitive global marketplace.”
Healey doubled the UK banking surcharge, which sits on top of corporation tax, to six per cent to fund an energy support package. The increase will last 15 months and is expected to raise an extra £1.5bn.
British banking stocks rallied following the Budget after the surcharge increase under shot previous expectations. It was previously thought that the levy would return to eight per cent, the level it sat at in 2023.
A banking sector source said there’s “disappointment” given the tax hike doesn’t signal support for the sector, though added many had gone into the day “thinking it could have been worse”.
Healey said he “celebrates” and was “grateful” for banks but was asking them to “help fund breathing space for British families”.
Question turns to JP Morgan tower
The Office for Budget Responsibility (OBR) said “some banks are assumed to move profits out of the UK in response to the higher tax rate,” adding the overall size of this was “uncertain”. It pencilled in around £190m of profit shifting overseas in its economic outlook.
JP Morgan employs around 23,000 people across the UK and has major hubs in London and Bournemouth. Last year, the US giant unveiled plans for a £3bn mega tower in Canary Wharf that would serve as its new London headquarters.
The 3m square feet tower in London is expected to inject as much as £10bn over the next six years into the local economy.
But the bank’s boss Jamie Dimon had previously warned the tower could be reconsidered if the government turned “hostile” towards banks. He later added sector-specific taxes have “adverse consequences”.
Dimon’s Wall Street peer Citibank boss Dame Jane Fraser previously sounded the alarm on a bank tax, warning “money votes with its feet”.
The tax increase is directly earmarked in the Budget papers to Healey’s plan for a £100 “household energy payment” to 20m households in council tax banks A-D.
David Postings, chief executive of trade body UK Finance, said increasing bank taxes was “not, in our view, the best way to deliver growth”.
“The Chancellor’s promise that this increase will be time-limited is therefore important, given we already have a tax regime that needs to be made more internationally competitive.”
Will Howlett, financials analyst at Quilter Cheviot, said the time limit on the levy increase “should be taken with a pinch of salt”.
“The geopolitical situation shows no sign of abating and given much of this windfall is going to help lower income households, there will need to be a material change to the conflict in the Middle East for the better in order for the government to feel they can return to the previous levels.”