Belfast Telegraph

Friday 18 April 2014

Anger over windfall tax on bonuses

Alistair Darling is considering hitting bankers with a windfall tax on their bonuses

Banking chiefs have reacted angrily to suggestions that a windfall tax on bonuses could be included in the Chancellor's Pre-Budget Report.

The British Bankers' Association (BBA) has warned that financial firms or key staff could abandon the City of London if Alistair Darling decides to go ahead with the one-off measure.

Responding to reports that he was keen on the idea as he looks to cool public anger over bonuses, the BBA said such taxes were "populist, political and penal".

A levy on bonus payments is one of several measures aimed at the wealthiest individuals thought to be on the cards for Wednesday's autumn Budget statement.

The BBA said that the Government should "bear in mind the strategic importance of the City to the UK".

It said prior to the turmoil of recent years, the financial sector brought in around £7 billion a year in corporation tax and raised fears that banks and their staff could relocate away from the capital if penalties were felt to be too heavy.

BBA chief executive Angela Knight told the BBC that a super-tax on bonuses would send the wrong message to the world about the UK's position as a financial centre.

"We have already seen quite a few companies shift out of the UK," she said.

"It might be popular to put very high taxes on a few (bankers), but we need to know how we would look internationally."

Chris Roebuck, honorary visiting professor at Cass Business School, said that it would be very tempting for bankers to relocate to other countries if tax hikes were too stinging.

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