A former deputy governor of the Bank of England has suggested that the government could impose a windfall tax on the country’s commercial banks, to rake in tens of billions of pounds for the treasury.
Sir Charles Bean also served as a member of the Budget Responsibility Committee.
According to The Telegraph:
Rishi Sunak should launch a windfall tax raid on banks to rake in tens of billions of pounds to help shore up the public finances, a former deputy governor of the Bank of England has urged.
Rising interest rates mean commercial banks which hold reserves at the Bank of England are receiving much higher income from those deposits because of the jump in the Bank’s base rate, which has risen from 0.1pc a year ago to 2.25pc now and potentially 3pc later this week.
It means the quantitative easing scheme, under which the Bank of England bought almost £900bn of bonds, is about to go from generating a significant profit for the Government to incurring a large loss.
But the Bank could change the rules to pay banks a lower rate of interest on the reserves which were created under QE, Sir Charlie Bean suggested, or the Government could ramp up taxes on banks instead.
“When QE started the interest that was paid on [reserves] was derisory, but now bank rate is rising, it is starting to be more substantial,” said Sir Charlie, who also served as a member of the Budget Responsibility Committee.
Raiding this stream of cash could be valuable for a Government in a tight financial spot: “You are talking about tens of billions, potentially,” he told a Resolution Foundation event.
“You could think of the higher bank tax now as a form of windfall tax – they are benefitting from the fact that bank rate is temporarily higher to squeeze out inflation.”
It’s been a quite while since anyone mentioned it, but I’m convinced that discussions have already taken place about bail-ins. Simply put, a bail-in is the government taking money from your bank account without your permission. It’s robbery. And of course, it’s tyranny.
It was mooted by SKY News economics editor back in 2020. In his column for The Times, Conway suggested that a bail-in might be necessary to pay for the economic devastation caused by lockdowns.
He even wrote that the government could do it in the dead of night, without any warning,
You and I would wake up the next day to find our bank balances had decreased.
I might be wrong (often am) but they’ll opt for a bail-in before imposing a windfall tax on the banks.
