Carsten Jung, associate director for economic policy at IPPR and former Bank of England economist, said the Bank and Treasury had “bungled the implementation of quantitative easing”.
“Public money is flowing straight into commercial banks’ coffers because of a flawed policy design,” he said.
“While families struggle with rising costs, the government is effectively writing multi-billion-pound cheques to bank shareholders.”
Speaking on BBC’s Today programme, Mr Jung said the £22bn taxpayer loss was roughly equivalent to “the entire budget of the Home Office every year”.
“So we’re suggesting to fix this leak of taxpayer money, and the first step would be a targeted levy on commercial banks that claws back some of these losses,” he said.
A tax targeting the windfall profits linked to QE would still leave the banks with “substantially higher profits”, the IPPR report said, external, while saving the government up to £8bn a year over the term of parliament.
But financial services body UK Finance said that a further tax on banks would make Britain less internationally competitive.
“Banks based here already pay both a corporation tax surcharge and a bank levy,” the trade association said.
The corporation tax surcharge was introduced by the previous government in 2021, and is an 8% levy on the profits of banks, on top of the standard corporate tax rate.
The Bank levy, introduced in 2011, is another tax on banks’ business activities, but is based on banks’ balance sheets, or the scale of their business, rather than profits.
UK Finance said a new tax on banking would “run counter to the government’s aim of supporting the financial services sector”.
Russ Mould, AJ Bell investment director, said the UK stock market had soured following the suggestion, with investors wondering “if the era of bumper profits, dividends and buybacks is now under threat”.
