Morning:
14°c
Bankers hit back: Bonuses cut and now we're hit with supertax
Mark Blunden23.04.09
CITY bankers have blasted Alistair Darling for slashing their bonuses and then hitting them with a 50 per cent supertax.
Financiers in Canary Wharf also slammed "idiot" consumers for sinking Britain into debt and said they felt they were made scapegoats by the public.
Bars on the waterfront were last night teeming with financial workers drinking champagne and pints as they bemoaned the Chancellor for hitting London hardest.
At All Bar One, there was anger that the Government had once more "clobbered" the financial sector.
One 39-year-old woman fund manager said: "We've been battered by Darling over our bonuses and now we're suffering this extra income tax. Almost all top earners live in London and I'm sure many wonder if it's worth staying here or finding a better tax deal abroad."
By 8pm at nearby Corney & Barrow in Cabot Square, there were already half a dozen bottles of £60 Delamotte champagne upturned in ice buckets.
One banker, 42, who earns "north of £150k", said: "For most people earning so much, another five per cent is a drop in the ocean. It just means they'll have to trade down from a bottle of Veuve Clicquot Yellow Label."
He added: "But £703billion public borrowing is really going to hammer the economy. The pension tax relief will further affect the pensions black hole and equity in the pensions market. The economy will pick up in the short term but will further stagnate into 2011."
Across the water at Browns, three financial data analysts were eating hamburgers and discussing the impact of the Budget. One, a 38-year-old from Islington, said: "This 50 per cent is really going to push a lot of people out of London. People with brains can work anywhere and they will choose to go somewhere like Singapore. Everyone is thinking it's the greedy bankers as opposed to idiots who have borrowed too much. You have people with no money and no means with a £50,000 car and a television that costs the same as a year's worth of grocery shopping."
At Davy's wine bar, workers drank pints of Old Wallop bitter at £3.30 and £3.45 bottles of Budvar. A partner in a financial services firm, who earns £600,000 a year, said: "If you're on £150,000 then paying an extra £7,500 is not really going to hurt. It will mean fewer foreign holidays a year or fewer bottles of champagne. People will be looking for other long-term options, such as property or investment trusts."
But two veteran bankers saw the extra five per cent as beneficial for Britain's financial health. One, in his fifties, said: "I remember at the start of my career, when Denis Healey was Chancellor, there was 83 per cent tax so I think 50 per cent is quite reasonable."
Reader views (44)
Fred in London,
There will be millions like me who cannot remember the last time they sipped a glass of champagne let alone bought a whole bottle after work! Many of us cannot even afford a pint of beer!
As for all the bar staff, taxi drivers, waiters, restaurants etc - this simply serves to underline what a luxury lifetsyle you all take for granted - expecting to be able to drink eat, be driven and flown all over the world. You are on a different planet!
And all these workers are service workers. Wouldn't it be a good idea if the UK actually MADE things for a change instead of simply importing luxury goods and foods to feed you lot?
It would be no bad thing if all these bar staff and waiters had to get a real job working in factories, acquiring valuable skills, building goods for export to earn real money for the country instead of prop up this papier mache mirage which is the City of London.
Jon Moulton is about the only honest person in the City who admits that his peers have been having a wild party at our expense.
- Mack Angus, Guildford Surrey
Fred, sorry you are wrong. Few people understand tax in France - I do, I lived and worked there. It is far, far higher than London.
The headline top rate has come down from what was 56% but you pay your rate on your total income - so if you pay 45% it is on ALL your income, not just the top 5%. And that is after paying Social Security contributions in the region of 25% or more. The combined take for high earners is vastly higher than London and often well over 50% of entire income!
And there are no equivalent non-dom rules - that is why all the non-Brits flock to London - virtually the last true tax haven in the world.
There are massive scams going on with earnings being taken as Capital Gains taxed at (was)10% now 16%. Whilst even teachers and nurses are often paying 40%. That is outrageous.
Like all City workers you think you are special, deserve favourable treatment. You have certainly HAD favourable treatment for a decade, but sadly for you the party is coming to an end.
London is a key time zone, so even if you move to Sing or HK, the banks cannot. They have to have a presence in GMT time zone.
Tough.
- Mack Angus, Guildford Surrey
Never mind you greedy little banker, you'll still have the Roller, Merc and Koenigsegg and your little Spanish hacienda and Caribbean beach hideaways. Anyway you hardly pay any tax at all due to the UK's stupid tax laws which do not include foreign income and assets in the tax due calculation. All due no doubt to the atrocious inequality of the British class system.
- Len, Perth, Australia
For those who don't believe in the brain drain and the wealthy moving abroad :
Well, I'm one of those high earners who moved to HK (albeit not just to escape the high tax regime). In the UK, I was paying tax + NI circa 70KGBP pa. realy hard cash that is now lost to the treasury forever because I took my role with me to HK.
I would rather not work then pay 60% of what I earn to a totally useless government who will waste it all.
Similarly, I know lots of other expats in the same situation - they're gone, the roles in LN have gone and hence the tax they paid is gone.
And don't forget all those jobs going to India.
For those who say 'good to high tax for high earners', you just don't get it. Ultimately it will be you who will suffer. Not my problem. UK is bankrupt and I and many others have moved on.
Game Over.
- Sarit, Hong Kong
Well said Mack!
- Trisha, East Croydon
Mack Angus. Your facts are wrong. Sure a minority of City people are non-doms, but most are English born and bred. Sure, a minority earn capital gains, most pay Schedule E income tax and NI just like a teacher, only on £250k the tax bill is about £110k. As the front page of todays FT shows, tax is now lower in France, Germany, the US and thats before you consider Switzerland, Singapore, Dubai etc. Even before yesterdays rises, the top 5% paid 40% of all income tax.
If you feel commissions are too high, there are plenty of low fee alternatives (ETFs etc). You can decide if the performance warrants the fee and if not move your money.
A few City people, most of whom probably don't earn £150k, sharing a bottle of Champagne, wine or beer is hardly a scanda. Those who object would presumably rather see the bar staff on the dole, along with taxi drivers, restaurant staff, shop staff, air crew, nannies, gardeners, cleaners, builders etc who will bear the real pain as high earners are forced to slash their spending.
Please don't fall for the smokescreen of this 50% rate. The increase in petrol, alcohol duties, higher NI etc will raise more tax than this one.
- Fred, London, UK
So does no blame with those who borrowed excessively?
If the economy collapses because lending does, doesn’t that imply to a certain extent lending facilitated the economy in the first place.
For 5 years everyone has said that its all going to end horribly but no one acted. The government has demonised the financial sector but tbh its really a little more complicated then that.
Unless the UK thinks fast and comes up with a new source of income soon then it's going to become a dust bowl - many things such as education and the arts we where so proud of have evaporated whilst we where in topshop.
- Al, London
A very good post: Mack Angus.
You are spot on.
- Mickyinlondon, london
The reality is that many of these people are non-doms paying tax at best only on their UK packages and in many cases not even on all of that, with split contracts, and Capital Gains Tax instead of Income Tax.
There is virtually nowhere in the world which allows these scams except London, so I doubt that most of them will move. It is an idle threat.
They certainly won't go to Paris of Frankfurt where they would get taken to the cleaners by tax!!
They think the public don't know how favourably they are treated here. Well some of us do KNOW! And as offshore rules are tightened still further it is getting more and more difficult to escape the net, except in the UK. That is why few of them will leave.
Meanwhile the people in this article demonstrate just why they are loathed by the public because they make ridiculous amounts of money out of our savings and investments, pouring bubbly down their throats bought out of excessive commissions on our funds. That is why so many of us have moved into property where we can control who takes what out of our funds.
- Mack Angus, Guildford
Have a little sympathy for the poor bankers. Many have taken out large mortgages to fund a life style based ion salaries and bonuses. Cut the bonuses and they are in trouble.Now they are joining the real world. My heart pumps for them all!!!
- Colin Macpherson, Gramat France
To Manny Goldstein
I am afraid your are wrong about companies not leaving, many have - WPP(thinking about - not sure if they actually left yet) , Regus, Macina, Maruho Co,Henderson Group, Charter, etc, etc.
We need to encourage wealth creators, not wealth manulipators, and this budget, combined with our over complex empolyment law will discourage people setting up here.
- Jreremy E, london
Until quite recently, the world of science and medicine complained that many of its finest were instead going into finance where they thought they could make more money. And look where it has got us....but it could have been worse; what if these "fine brains" had been in charge of healing you in the hospital or sending a rocket to the moon? The mind boggles. At least, perversely, by going into banking they are where they can do least harm....!
- John, london
Go for Gods sake leave the country,we dont need you,never did and never will.
- Kev, London-UK
I DID NOT get into excessive debt, I DID save - but whilst the bankers took risks with my money and still got bonuses for failiure, I ended up paying twice: pension funds decimated, virtually no interest on my savings, and bailing out the idiots with the taxes I thought would be used for services, education etc. And I'm one of the lucky ones, at least I still have a job and a home for now. So my message to those poor bankers bleating about higher tax on their undeserved pay levels is to leave if you think you can do better elsewhere, at least you have a choice.
And if France is so much better at saving, then how come its finances are also in a mess? Nothing to do with bankers??
- Jn, London, UK
If they hadn't insisted in robbing us blind in the first place they may not now be in the top tax bracket. As someone who can only dream of that kind of income, I have no sympathy whatsoever. What took Labour so long?
- Deborah, London
I have never had a credit card in my life; nor ever wanted one; but I had one company sending me constant applications for a credit card; I got fed up with all the junk mail; so I filled in a credit card form; I told them I was a Fraudster by trade; my address was cell 10 Alcatraz; and I had lived there for 40 years with the option of ten more years, I gave my name as Robbie Burns; and ever since then I still get applications to activate my credit card; and they always us the name Robbie Burns; although they still send the junk mail to me in London; and not to Alcatraz; maybe the postman returns the mail as tenant no longer living here; return to sender.
No wonder credit card fraud is massive.
- Mickyinlondon, london
Good Afternoon: Richard of Colchester.
It may not have occurred to you that the brightest have been leaving these shores for centuries; looking for pastures new and more wealth; in the past it was called Empire building.
Today it is just the fact of getting more money in another country; like British trained doctors and nurses do in the USA etc.
But I am the first to say, that if anyone is not happy in the UK; then go elsewhere; this includes our own people, as well as new-comers etc.
As to Bankers only meeting the demands of the greedy; I point out that if bankers never offered 100% loans, nobody could buy anything with nothing put down; before any purchases are made etc.
To be honest; if any banker wants to lend me a 200% loan; I will have a dozen right now.
But who is the real fool; the banker or me…….Mick.
- Mickyinlondon, london
It is acknowledged that increasing tax levels does not always equate to an increase in the tax take, as tax avoidance schemes are used.
When income taxes were cut in the 80s and 90s, the tax take went up!
The uninformed posters should take note.
- Dave Davies, Basingstoke
There is a simple flaw in the argument that if you tax the rich that they will leave. The individual may leave but the bank\company\institution will not. One of the reasons the City attracts so many businesses is location, it is perfectly placed as it is between New York and the Asian financial markets, perfect for the 24 hour global economy.
The other thing about these individuals is that they are well paid because it is the going rate for the job, NOT because they are unique! If they leave, there will be plenty of others to take their place.
- Manny Goldstein, London, UK
GC
I think you will find the following items in the budget.
1) Loss of personal allowances if you earn over 100k = c. 3k more tax.
2) New 45% rate of tax ...
3) pension contribution hit
....I think you will find this person earns over 150k, even at 160k the tax take @ 51% = +5.1k!.
So, this person is not stupid, probably underestimating the tax hit!
Who looks clever now?
- James Macleod Ritchie, Oyster Bay Cove
Arrogant, avaricious, self-seeking traders in banks and hedge funds thought themselves super-brains but now we know they were super-idiots all along. Their incompetence precipitated this crisis that has hurt ordinary working people so much. They deserved to be financially penalised and are worthy only of our contempt.
- Richard Kennard, Welling
To say us 'idiots' borrowed to much is a pathetic excuse the only reason the uk population was offered all this debt was to cover up the debt the 'very clever' bankers had got themselves involved in the usa sub prime market.They packaged the bad debt with the perceived good debt from the UK and sold it on to,well we dont have to be to clever to see which banks, building societies that got mugged when the music stopped on the money go round.Not to miss a opportunity the banks who got rid of the debt pleaded they were skint,drove the markets down got huge amount of public money bought the shares back cheap and bobs youre uncle they are all making healthy profits again apart from the banks that got mugged who were left to be propped up by the taxpayer.
- Chris, London
These insensitive fools. I wish I could earn the salary and bonues these banker get. Because of these so called great minds, I'm now out of work. 50% on anything above 150k isn't a hard deal. They've hadf it easy for far too long.
- Quiet At The Library, London
A supertax for the super rich sounds pretty good to 88% of the population.These fatcats gained financially in the good times,payback time is here.Labour did the right thing but need to tax bonuses at 90% and fix the tax loop holes.
- David, london
So by the " idiots who have borrowed too much " you must mean the Government.
- Enuff, London
On average the population of britain have been greedy and borrowed far more than they could afford. You cannot blame the bankers for that. If you want something - SAVE.
In france there is a culture of saving -in the UK its a culture of having whatever you want by whatever means.
Do you blame those who failed to control the spenders or the spenders who now have a home , car ,tv, etc totally beyond their means??
- Terry, Hennebont France
These bankers are a joke!!! how dare they blame the consumers.....As a lone parent living in London on an income of 18,500 per year...I was offered a loan by my bank of 25,000...didn't ask for any loan, it was sent to encourage me to get one...offering someone something that is way over their income...come on bankers tell me who's the "idiots" now.
- Sarah, London
aahhhh, the poor things. The sad fact is, most bankers at the very top (who were instrumental in causing the crisis and robbing the public finances to sort it out) will not have, or ever will, pay anything near the top rate tax band. They will have it all sheltered away in complicated financial dealings to avoid paying any tax at all.
- Ag, London Village
All this "banker bashing" really has to stop! I work in the city and now will have to pay extra tax to support "wasters" that choose to sit at home multiply like "rats" and borrow way past their means and that is why we are in this crisis! PS: and to answer any "un-educated" backlash from this comment people who are sitting on the side lines (or on a sofa bought on credit watching daytime TV) with absolutely no idea how the city functions, I'm 28 work on average 60+ hours a week, weekends, etc and my company has not received any funds from the government and I for one will certainly not be downgrading to cheaper "shampoo" at the weekend - I work damn hard, pay extortionate tax (to support this sinking country) and I can spend my hard earned money however I wish!!!
- Stephen, Square Mile
no point trying the make it big in the country, gordy wants your money, unless your a mp and you can just say your an MP
- Ben, London, UK
Kate of London - Your misinformed bitterness directed at bankers would be the same as me saying all people called Kate in London are thick - it's tempting, but it would be incorrect.
You have fallen for the Labour government's rhetoric that the bankers are all to blame for this. It's a very small proportion of the people you sweepingly call 'bankers' who have made stupid errors that have contributed to the financial problems. But their mistakes are only a small part of the equation.
We need the financial services industry in the UK to recover its position as a global leader as we need the tax revenue from these companies and their employees more than ever when it comes to paying down the Government debt over the coming years. It's worth remembering that.
- Paddy, Belfast
And who lent the money to the "idiot consumers"? The bankers. And their greed is to blame for this global meltdown which they seem to be in complete denial about. Further the kind of money they continue to earn is an obscenity to average hard working person.
- John David, London
how dare he mentioned "idiot consumers" hasn't he read the script?
bankers bad.
politicians super heroes
consumers had evil credit forced upon them by insidious bankers plot.
I mean this isn't really on. How can you maintain an witchhunt if someone dares to think for themselves.
- Scott, london
They are lucky to have a job at all after their bloody greed and incompetence. If they don't like let them leave, they will find out super quick that they are unemployable
- Trevn, Abu Dhabi
As far as I'm concerned, as many wealthy, greedy bankers and also other rich people can leave London as possible along with their stuck up wives and bratty, snotty kids and work abroad as 'tax exiles'. Good riddance.
- Mick, Hackney, London
I agree James,As much as i hate the arrogance of many bankers the FSA has sold the people of this country up the river.I recently received payment from overcharges to my credit card then within a week the card company changed the interest rate from 17.5% to 25%.How can they do that?The good old FSA are to busy getting wined and dined by your lot down canary wharf to worry about the victims of the bankers abject greed.This is the same with the infamous £25 charges they have given the banks the right to drag this issue on forever leaving the people who are being robbed on the brink of bankruptcy.It is also apparent the banks are setting up a credit blacklist for anyone who tries to claim back these unlawful charges,What are the FSA doing? SWEET FA.
- Chris, London
"Mickyinlondon" be careful what you wish for! The countries brightest will depart leaving the UK with very little. Please remember that the bankers only met the demand of a greedy, "i want it now" society encouraged by unprecedented borrowing and unproductive government actions.
- Richard, colchester
Poor bloody bankers - fancy having to trade down from Veuve Clicquot Yellow Label.
To all those who don't want to have a brake put on their greedy acquisition of money: don't let the door hit your behind on the way to the airport (and you're welcome to leave your passport there as well).
- Ian, Cambridge
Erm, the so-called financial services partner says that on £150,000 you will only pay £7500 more? Perhaps that says even more about his dim-wittedness. The new 50% kicks in at £150K i.e. is only applicable to the money above that and is not 50% on the first £150K. At £150K you pay not a penny more!
- Gc, London
It is wholly apparent that the bankers featured above are living in cloud-cuckoo land.
ALL BANKERS SHOULD PAY AT LEAST 50% TAX ON THEIR INCOME.
MP's.....BANKERS.......SPIN DOCTORS.....WAFFLE MERCHANTS..
They all need putting in a large sack and throwing overboard.
- Reuben Camara, Morecambe/Lancaster
For those readers outside of the financial industry, I would just like to make them aware that this article is not reflective of most of the City work force. Whilst I earn a good wage compared to the national average, it is not enough to fuel the life style described above. My wage goes to support my family and pay my mortgage. My wife stays at home to bring up our children in the hope that they go into society as decent people. There is precious little money left over after the extorniate costs of travel, food, utilities and tax. Now the tax will be even worse.
This crisis was not the sole responsibility of banks. The government is at fault for not mending the roof while the sun was shining, making the FSA (civil servant) go light on regulation and allowing credit card companies to offer rediculous allowances to consumers who had no chance of paying back the debt.
- James, City
I point out that the financial sector, and the Waterfront Bars; it is you alone that has clobbered the tax payer, not the other way around.
Had you not been idiots and gready; you would not be facing any tax rises next year.
Personally speaking; I think you should all be paying the tax now and back dated; not next year.
The rest of us are paying as from last night.
- Mickyinlondon, london
For those that want to stay in the UK; work and pay their way; taxes as well, you are welcome by the people.
Those that do not; then go abroad now; and never return; you are not wanted or needed; in the UK, by anyone.
- Mickyinlondon, london
Yeah, that's right Mr "Master of the Universe" banker, blame the victims, then scuttle off to Singapore or wherever will have you and leave us, the poor bloody British taxpayers, to clean up the biggest financial mess in history.
Thanks a lot for that, and I'll help you pack.
- Kate, London
