# Chancellor should cut benefits instead of taxing banks > IMF urges UK to slash welfare spending over bank tax plans. - Title: Chancellor should cut benefits instead of taxing banks - Summary: IMF urges UK to slash welfare spending over bank tax plans. UK's IMF official says cutting benefits, not taxing banks, would fix budget shortfalls. - Keywords: chancellor, imf, benefits, bank taxes, uk budget, john healey, corporation tax, lloyds, natwest, tuc, news, entertainment - Source: Dailymail — https://dailymail.com/money/markets/article-16215123/Cut-benefits-instead-taxing-banks-IMF-tells-Healey.html?ito=1490&ns_campaign=1490&ns_mchannel=rss - Published: 2026-10-17T07:18:33+00:00 - Read time: 1 min - Topics: chancellor, imf, benefits, bank taxes, uk budget, john healey, corporation tax, lloyds, natwest, tuc, news, entertainment ## IMF warns on UK tax plans International Monetary Fund says UK should cut benefits instead of taxing banks to fix budget shortfalls. > Britain should cut the ballooning benefits bill rather than hit banks with higher taxes ## Chancellor faces backlash Chancellor John Healey faces criticism for planning bank taxes while calling banks 'the jewel in the crown of the british economy'. > John Healey is speaking out of both sides of his mouth ## Bank tax hike details Healey plans to raise bank surcharge from 3 per cent to 8 per cent, potentially earning £2billion annually. > The chancellor looks set to hike the surcharge banks pay on top of standard corporation tax from 3 per cent to as high as 8 per cent ## Economic impact warnings Industry warns bank tax hike could cost economy £20billion over next decade by reducing lending and investment. > But industry chiefs warned the move would push up interest rates on mortgages and corporate loans and reduce lending and investment ## IMF official's advice IMF economist Helge Berger says cutting welfare spending and better-targeting benefits would make budget numbers add up. > removing the triple lock on pensions and better targeting social benefits were among the options ## Bank shares drop Lloyds and NatWest shares fell 2.7 per cent and 2.4 per cent as investors worried about bank tax plans. > Shares in britain's biggest banks fell yesterday, with lloyds down as much as 2.7 per cent and natwest 2.4 per cent ## TUC demands bank taxes TUC says banks make £1billion weekly while bonuses hit post-crash records and should pay fair share. > Britain's big four banks are making a billion pounds a week, while bonuses have hit a post-crash record ## Bank tax history Bank tax surcharge was cut to 3 per cent under Rishi Sunak when corporation tax rose from 19 per cent to 25 per cent. > The bank surcharge - and supplementary 8 per cent levy on profits in addition to corporation tax - was introduced a decade ago ## UK Finance warns UK Finance says bank tax hike would reduce lending by £17.5billion over next decade and hurt UK competitiveness. > In a letter to the chancellor this week, uk finance chief david postings said higher taxes on banks would reduce lending to households and businesses by £17.5billion over the next decade ## International tax comparison UK banks face 46.5 per cent tax rate compared with 39.1 per cent in Frankfurt and 27.9 per cent in New York. > UK banks are currently taxed at a rate of 46.5 per cent once employment levies and vat are taken into account ## What next? Chancellor must decide between cutting welfare spending or raising bank taxes to fix budget shortfalls. > The economic costs of raising the surcharge would accumulate over time ## Key takeaway UK's IMF official says cutting benefits, not taxing banks, would fix budget shortfalls.