A committee of City grandees have called for a “predictable and stable” tax regime to help London retain its position as a world leader in financial services.
The plea comes in a report commissioned by Alistair Darling amid a row over the Chancellor’s decision to hike the income tax rate to 50p for high earners.
The Financial Services Global Competitiveness Group — chaired by former Citi chairman Sir Win Bischoff — said tax needed to be “stable, sustainable and competitive in the long term” to ensure London remains a global financial hub.
The report, officially launched by Chancellor Alistair Darling, also stressed the need for better regulation to rebuild trust in the battered banking system.
It admitted the UK financial centre’s reputation had been hit by the banking crisis and will also need to partner with other global markets to fend off the threat of new emerging centres.
Sir Win said: “The UK is fortunate to possess a financial services sector which stands out in relation to other countries.”
He added: “Things have gone wrong in the banking arena, but financial services and the professional services associated with it are a far larger part of it.
“This report should not be seen to be complacent — regulation is going to be terribly important and we believe that strong high standards of regulation are needed for financial centres.”
The report said innovation should not be stifled in the City despite the part played in the banking crisis by complex and exotic financial instruments.
“Some innovation has been put to inappropriate uses in the past, but you do not wish to limit innovation,” said Sir Win.