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Sunak to cut tax on banks to keep City competitive, say reports

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Sunak to cut tax on banks to keep City competitive, say reports

Rishi Sunak is preparing to announce a tax cut for Britain’s biggest banks at next week’s budget to maintain the competitiveness of the City of London after Brexit, according to reports, despite plans to raise taxes on workers.

Ahead of the setpiece budget and spending review next week, the Financial Times said the chancellor planned to slash the corporation tax surcharge imposed on the banking industry by more than 60%, taking the levy from its current level of 8% to just 3% from April 2023.

The development comes after Sunak had warned the Conservative party conference this month that the time for tax cuts would need to wait until the public finances were back on a sustainable footing, amid record levels of government borrowing incurred during the Covid-19 pandemic.

Since the start of 2021, the chancellor has announced plans to raise taxes by £36bn a year – a bigger rise than at any budget since the mid-1970s – including plans to raise national insurance taxes on workers and businesses.

It also comes after the government slashed universal credit benefits from early October by more than £1,000 a year in the biggest overnight cut for social security benefits, in a development poverty campaigners warn would push more households into distress amid an unfolding cost of living crisis this autumn.

The chancellor announced a review of the banking industry surcharge at the spring budget, saying a planned increase in the main rate of corporation tax could put London at a disadvantage to other big financial centres such as New York and Hong Kong.

Corporation tax is set to rise from 19% to 25% from April 2023, which the Treasury said at the March budget “would make UK taxation of banks uncompetitive and damage one of the UK’s key exports”.

It comes amid concerns over the impact of Brexit on the City of London as large amounts of financial business continue to steadily drift to European financial centres, as well as to Asia and the US. Earlier this year, it emerged Amsterdam had overtaken London as Europe’s top share trading hub, raising questions over the future of the City and its contribution to the wider UK economy and the British exchequer.

The chancellor’s critics leapt on Sunak’s comments to the Tory party conference earlier this month, amid anticipation for a tough tax and spending settlement elsewhere at next week’s budget.

John McDonnell, the former shadow chancellor, said: “Sunak talked about morality in his conference speech, where’s the morality in cutting universal credit forcing more children into poverty whilst reducing the taxes on wealthy banks? Appalling judgment.”

Despite improvements over the past year as the economy recovers from Covid, the government is still on track to borrow £180bn in the current financial year, or about 7.7% of national income. Since the second world war, such a level has only been reached during the financial crisis and last year.

The banking surcharge was introduced by George Osborne in 2015 with the aim of ensuring a fair contribution from the banking industry after the then chancellor scaled back a separate levy on lenders’ balance sheets, and cut corporation tax for other firms to among the lowest levels in the western world. The levy raised £1.5bn in 2019.

Against the backdrop of heavy lobbying from the sector, Sunak dropped a heavy hint in his Mansion House speech in July that a fresh settlement was likely, saying that his ongoing conversations with banks had “only reinforced my view that the combined tax rate on UK banking profits should not increase significantly from its current level”.

A Treasury spokesperson said: “We do not comment on fiscal policy outside of budget.”

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35 illegal tax collectors facing prosecution in Benue

The Acting Chairman of the Benue State Internal Revenue Service (BIRS), Emmanuel Agena, has revealed that 35 persons involved in illegal tax collection in the state are currently facing prosecution.

Agena announced that the agency has set an ambitious target to generate over N16 billion in revenue for the year 2024 following the successful surpassing of its N14 billion target in 2023.

Speaking to journalists on Monday, Agena expressed concern over the activities of illegal tax collectors in the state, noting that many of them were supported by influential personalities.

He stated that his administration at the BIRS had put an end to the era of patronage by politicians, aiming to significantly reduce illegal tax collection activities.

The BIRS boss also condemned a recent incident in which a truck carrying palliatives from Adamawa to Anambra State was hijacked by youths in Aliade, Gwer East.

He disclosed that three suspects have been arrested in connection with the incident.

“A truck was intercepted and the driver beaten while the windscreen of the vehicle broken and over N200,000 was stolen.

“Three persons have been arrested and are in police custody. They will be moved to DSS for thorough investigation.

“We aim to flush out or reduce illegal tax collectors to the barest minimum. Already, 35 people who engaged in illegal tax collection were arrested and facing prosecution.

“This has been a big challenge. We have constituted a team headed by the director of Tax collection. Prominent people in the state are involved in encouraging these boys,” he stated.

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Nigeria’s Inflation rate hits 33.20% in March- NBS

The National Bureau of Statistics NBS says Nigeria’s inflation rate jumped to 33.20% in March 2024 compared to February 2024 headline inflation rate which was 31.70%.

A report released by the NBS on Monday, April 15, reads

“Looking at the movement, the March 2024 headline inflation rate showed an increase of 1.50% points when compared to the February 2024 headline inflation rate.

“On a year-on-year basis, the headline inflation rate was 11.16% points higher compared to the rate recorded in March 2023, which was 22.04%. On a month-on-month basis, the headline inflation rate in March 2024 was 3.02%, which was 0.10% lower than the rate recorded in February 2024 (3.12%).

“This means that in the month of March 2024, the rate of increase in the average price level is less than the rate of increase in the average price level in February 2024.”

 

The inflation report by the NBS followed the hike of Nigeria’s interest rate from 22.75% to 24.75% by the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN).

The March inflation rate was released at a time when measures by the apex bank to strenghten the naira against foreign exchange have seen some positive results.

The naira has appreciated against the dollar in recent weeks, gaining over 40%, from about N1,900/$ to about N1,100/$1 now.

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NAFDAC seals popular Supermarket in Ibadan

The National Agency for Food and Drug Administration Control (NAFDAC) has sealed a popular groceries and cosmetics supermarket, Pinnacle in Dugbe area of Ibadan over sale of fake products.

The supermarket, usually a beehive of activities was now a shadow of itself as the gate leading to the premises was shut with an inscription directing customers to its branch at Challenge.

Management of the supermarket cited technical issues as reason for its closure.

An inside source who pleaded for anonymity however revealed that problem started on Tuesday, 2nd April , 2024 when NAFDAC surveillance team stormed the mall to enforce total shutdown of the premises, thereby forcing shoppers out of the supermarket.

“The NAFDAC team came inside the mall and told us to close, even though people were many inside who wanted to do shopping but they couldn’t because the technical issue started and they all went away in disappointment”, the source said.

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