British banks face bonus tax
- Source: Global Times
- [00:48 December 08 2009]
- Comments
Britain's government is considering slapping a "supertax" on bankers' bonuses amid fears of a lavish season for senior staff despite the global financial crisis, reports said Monday.
Chancellor of the Exchequer Alistair Darling is mulling the levy on bankers who are handed bonuses above a certain level, and it could be included in his latest taxation and spending plans to be revealed tomorrow, the Financial Times said.
Staff at British banks as well as the British arms of overseas-based firms, such as Goldman Sachs, JP Morgan and Deutsche Bank, could be hit with the new 12-month tax, the BBC said, citing unnamed Treasury officials.
The tax could appeal to voters in recession-hit Britain amid anger over huge bailouts to struggling banks following the global downturn, and a row over bonuses planned for staff at state-rescued Royal Bank of Scotland (RBS).
Darling delivers his pre-budget report against the backdrop of national debt and a record re-cession ahead of a general election by mid-2010.
Darling is expected to focus tomorrow on fixing Britain's public finances, which have buckled under the weight of the bailouts of the banks and a sharp economic downturn that has slashed taxation revenues.
Ahead of the report, Prime Minister Gordon Brown will set out plans for cutting public spending by 12 billion pounds ($19.6 billion) over four years, as he details plans to slash the massive budget deficit.
Brown was scheduled to outline the "efficiency savings" in a speech early today.
"The proposals we are setting out in this plan – which is just one element of our efforts to reduce the deficit – will go further than we have ever gone before in streamlining central government," according to Brown's draft.
Darling on Sunday told BBC television that the government would not be "blackmailed" over bonuses but appeared to play down the prospect of new taxes on the financial sector.
"We are not going to be held to ransom by people who believe you can pay extraordinarily high bonuses without regard to what's going on," he said.
"With all matters of tax – whether it's individuals, whether it's companies – you've got to be fair, you've got to be reasonable," he added.
"You've also got to have an eye on what the long-term result of all this might be."
Some observers blame the bonus culture of the world's two pre-eminent financial sectors – the City of London and Wall Street – for encouraging excessive risk-taking, which had helped to tip the global economy into chaos.
And separately, five senior executives at American International Group told the insurer last week in written notices that they may quit if their compensation was cut significantly by the US pay czar, Kenneth Feinberg, the Wall Street Journal re-ported Sunday.
Agencies
