Belfast Telegraph

Saturday 23 August 2014

Windfall tax on bankers possible

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

Chancellor Alistair Darling is widely expected to announce a raft of tax increases for the better off when he delivers his Pre-Budget Report on Wednesday.

With the Government facing an estimated £175 billion budget deficit, Mr Darling's speech is expected to contain several revenue raising measures.

But with a general election looming, he will have to tread carefully to avoid alienating Labour supporters.

As a result, capital gains tax (CGT) and inheritance tax are thought to be the most likely taxes that he will increase, while income tax for higher earners could also be raised.

On Sunday, Mr Darling left the door open to a windfall tax on bankers' bonuses. But he did warn the better-off that they would have to pay more towards the cost of the economic recovery.

The BBC has reported that the Treasury was considering a super-tax on bankers who receive bonuses above a certain level. Other options included increasing national insurance charges for banks that pay big bonuses or taxing investment banks directly.

Mr Darling earlier appeared to play down the prospect of new taxes on the financial sector, but nevertheless stopped well short of ruling them out.

Speaking to BBC1's Andrew Marr Show, Mr Darling added: "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. You've also got to have an eye on what the long-term result of all this might be."

But he also insisted the Government would not accept "wholly unreasonable" bonuses at banks that had been bailed out by the taxpayer. Amid a row with Royal Bank of Scotland, he added: "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 indicated there would be no back-tracking on the new 50p top rate of income tax on earnings of more than £150,000, pencilled in for April. And, referring to inheritance tax, he went on: "It wouldn't be right to be giving further tax breaks to people at the very top."

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