Overview

• IPPR unveiled a ‘QE reserves income levy’ on major banks to recoup taxpayer costs from quantitative easing, citing annual losses of about £22bn and potential receipts of up to £8bn a year.
• Modelled on Margaret Thatcher’s 1981 deposit tax, the charge would apply to income on central bank reserves and would exclude smaller banks.
• The levy would end automatically once QE gilts are off the Bank of England’s balance sheet or the bank rate reaches 2%, underscoring its temporary design.
• The report also calls for slowing gilt sales to limit realised losses, estimating more than £12bn a year in savings and over £100bn across this Parliament when combined with the levy.
• HM Treasury stressed a growth-first approach and the MPC’s operational independence, the Bank said tax and spending choices are for government, UK Finance warned on competitiveness and existing charges, and no policy change has been announced.