HSBC profits reach seven and a half billion as Guardian and Mirror ask whether banks should fund cost-of-living help

HSBC reported profits this week that the Guardian pegs at seven and a half billion pounds. The Guardian and the Mirror both carried calls for a windfall tax on banks to fund cost-of-living support, reviving an argument that has run since the financial crisis. The question is whether banks enjoying record profits while households struggle should face a higher levy.

Britain already operates a bank levy, introduced over a decade ago in the aftermath of the crisis. It taxes bank balance sheets rather than profits, and it raises revenue every year whether the banks are profitable or not. A windfall tax would be a different instrument: a one-off or temporary surcharge on profits above a threshold, justified by unexpected gains.

The economic question is what happens next. A one-off tax is, by definition, not recurring - governments cannot fund recurring spending with it unless they are prepared to make it permanent, at which point it is not a windfall tax but a profits tax with a different name. The second-order question is what a higher permanent tax does to the location decisions of globally mobile banks. The politics of a windfall tax are simple; the fiscal arithmetic and the competitiveness trade-off are harder.

What to watch: whether the Treasury moves beyond the call and actually proposes a levy, and whether it is structured as a genuine one-off or as a permanent increase under another name. The Guardian reports the call; the government has not yet responded.