Banks 'face windfall bonuses tax'

[muriel_volestrangler]

The Treasury is preparing to levy a £1bn a year temporary windfall tax on British-based banks, BBC business editor Robert Peston has learned.

Options being considered include a super-tax on bankers who receive bonuses over a certain level.

Another is to increase employers' National Insurance charge on banks that pay big bonuses - or tax investment banks directly, said Peston.

http://news.bbc.co.uk/1/hi/uk_politics/8398189.stm

But if it is imposed, it won't just apply to UK banks such as Barclays, HSBC and Royal Bank of Scotland. The British arms of overseas firms, such as Goldman Sachs, JP Morgan and Deutsche Bank, would also be liable.
...
"It is a matter of justice" said one minister. "Investment banks are making exceptional profits as a result of the intervention of government and the Bank of England to limit the economic damage from the mess caused by those very same banks. So it would be outrageous if they paid those profits to employees and bonuses. We are determined to prevent that".
...
Whatever tax is finally chosen and announced (if any) would not last longer than two or three years.

The Treasury believes that the City of London would not lose massive numbers of employees or business to rival financial centres if a super tax lasted just a few years.

However it fears there would be serious damage to Britain's financial services industry if banks or bankers based in the UK were perceived to pay much more tax than those elsewhere.

http://www.bbc.co.uk/blogs/thereporters/robertpeston/2009/12/banks_face_windfall_tax.html

Not far off what I suggested 3 months ago: http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=6585277&mesg_id=6585310 . Probably not as big, though. I hope they tax them directly.

[Hopeless Romantic]

1. How many will reregister their tax residency elsewhere?

I suppose it depends on how hard he hits them.

[T_i_B]

2. Right on cue...

Although I must admit that the windfall tax I was most keen on was on energy companies 2 years ago which the government didn't do!

http://www.38degrees.org.uk/page/speakout/pbrwindfalltax

Today’s papers all report that right now the Chancellor, Alistair Darling, is considering a tax on bankers’ bonuses. We’ve been campaigning together for months now for action to rein in bonuses, and this is great progress.

But the banks are fighting back. They’re using all their lobbying power to try to stop the Chancellor’s plans, even claiming that taxing their bonuses would breach their human rights.

The government says it will make its decision “in the next 48 hours”. That means we’ve got 48 hours to outweigh the banks’ lobbying pressure. Together we need to send Alistair Darling a clear message that after the taxpayer has spent billions bailing out the banks, it’s only fair to put a tax on their bonuses.

Many families in the UK are facing a tough, recession-hit christmas. Millions of people have lost their jobs or their homes, or suffered the worry that it might happen to them. Meanwhile, over 5000 bankers are currently expecting to get a bonus of over £1million.

The banks played a lead role in causing this crisis and it took a huge amount of taxpayers’ money to rescue them. Yet even banks largely owned by the taxpayer, like RBS, are putting heavy pressure on the chancellor to allow them to hand out record amounts of taxpayers money in bonuses.

[LeftishBrit]

3. Done, and k&r to the thread

[muriel_volestrangler]

4. And here it is:

1307 Here it comes. Bankers' bonuses over £25,000 will be subject to a one-off 50% tax. The individual will not pay, their employer will - all bonuses over £25,000 will be pooled and then taxed en masse. Therefore, the chancellor says, banks can use their profits to build up their capital base, or, if they use it for bonuses, they will have to give a large sum back to the taxpayer.

http://news.bbc.co.uk/1/hi/uk_politics/8403127.stm

He said they estimate this will raise half a billion (pounds). Not a huge amount, but I'm glad to see it.

[Anarcho-Socialist]

5. they'll still moan about this of course

Never mind the fact we gave them £1.3trillion in guarantees, loans and free cash. They're "doing god's work" don't you know, it's their birthright to exploit us.

The revenue enjoyed by Blair/Brown (if not further back) from the financial sector has effectively been wiped out. It was really fictitious capital from a boom cycle and it's now heaped onto our National Debt. This revenue was pretty much a credit advance.

[LeftishBrit]

6. I bet these same bankers would be the first to exclaim in self-righteous horror...

if workers in some everyday, far less well-paid (but probably much more useful) industry threatened to cause damage to the country through strikes and withdrawal of services because they weren't getting enough pay or 'perks'. But it's definitely one law for the (extremely) rich and another for everyone else.

There is the acronym on GD: IOKIYAR which turns out to mean It's OK If You're a Republican. One could similarly say: IOKIYAB - It's OK If You're a Banker.