Tonight:
4°c
MPs call for bankers to pay 90 per cent tax on bonuses
Nicholas Cecil, Chief Political Correspondent13.07.09
Bankers should be hit with a punitive 90 per cent tax on bumper bonuses, MPs demanded today.
They launched their campaign for the eye-watering high levy as City banks were preparing for a new wave of bonuses less than a year after the financial system came close to meltdown.
Wall Street giant Goldman Sachs will tomorrow publish its second quarter results which could see profits of £1.2billion, putting its 5,500 London-based staff in line for bonuses averaging £430,000. MPs accused City chiefs of pretending the financial crisis had not happened by continuing to dish out "generally excessive" payments. They called on Alistair Darling to slap a 90 per cent levy on all bonuses in excess of 15 per cent of salary.
Labour MP Lindsay Hoyle, one of the MPs backing the Commons motion, condemned rewarding bankers with "suitcases full of money". Branding many of the bonuses "unjustified", he added: "No lessons seem to have been learned. The public feel quite rightly frustrated and let down."
The Chancellor will not support such an exorbitant tax rate on bonuses but warned that banks could be punished with higher capital requirements if they refuse to heed the calls to stop rewarding reckless deals with big payouts. Outlining proposed reforms of banking regulations last week, he highlighted "powers to penalise banks if their pay policies create unnecessary risk".
Lib-Dem MP Paul Holmes, who signed the motion, accused Mr Darling and the financial sector of dithering. He said: "This is a warning shot. The Government and the City can't just ignore practices that almost destroyed the economies of the western world last year."
A British Bankers' Association spokeswoman said: "The danger with a higher tax on bonuses is that it could disadvantage low-paid workers in branches for whom bonuses represent a large part of their salary." This argument is likely to be given short shrift by many MPs.
The body managing the taxpayer's stake in Lloyds Banking Group and Royal Bank of Scotland said it was sitting on paper losses of £10.9billion. UK Financial Investments Limited, which manages the public's 70 per cent stake in RBS and 43 per cent of Lloyds, said every household in the country has more than £3,000 invested in shares in the two institutions.
The losses do not include B shares involved in the taxpayer-funded asset protection scheme. An £18.1billion shortfall was registered in February.
Reader views (32)
MPs ideas! What a laugh! Are the MPs going to pay back all of the monies they have thieved from the taxpayers? They just love blaming the bankers. They think we are idiots and hold us in contempt. The bankers and the MPs should be ashamed of themselves and do all they can to get England back on its feet.
- Lin, London England
Why not just get the bankers to sponsor an MPs second home out of their bonus? Or pay for the rented movies....
- Jeremy, Stoke Newington
I've been out of the city for 20 years but I worked in a section that calculated profits and bonuses, usually 1/28th of what they made the bank, talk about idiots that want to kill the golden geese or force them abroad. The politics of envy and ignorance is writ large in many comments here. Fools!
- Douglas, London UK
yes, and MPs shouldn't be able to claim expenses until the economy's back in the black. I know which category works harder!
- Marianne, SW France/London
I agree that there should be restraint on bonus payments. If governments around the world had not rescued the not so stable banks then even the more stable banks would have collapsed like a deck of cards. I do agree with reward for sucess but given what has happened there should be no bonus for five years.
- Mike, London
The Bankers should not receive any bonuses at all until the Banks have paid back all of the bail-out money that Taxpayers contributed to save Bankers jobs plus the interest on the bailout money at the rates the Banks charge personal customers has been paid back. Why pay Bonuses for sustained failure?
- T Ricin, Ealing England
Yes fine so long as the MPs pay the same on their 2nd homes allowances and other 'legal' scams they enjoy.Talking of which why have no criminal charges been made against those MPs who were caught with their hands in the till with false claims?
- Mike, London England
Brown and Darling - taxpayers are still waiting for the litigation to start on culpable bankers, financiers and hedge funds.
We have yet to hear of a pending court trial of a director or senior manager from any bank or hedge fund in the UK. These need to start soon - the day of the patsy has passed for good.
- Jim, London
I recently moved to Abu Dhabi where I don't pay taxes. For each of the previous 13 years I had paid a 6 figure sum in tax in the UK. I wonder who is paying for all those public sector workers now?
- Duncan, Abu Dhabi
Nice idea, but they'll hide it in Guernsey and avoid the tax.
- Neil, London, London UK
Wallytrader/Monty - The government know this and are already looking at cuts in public sector pensions. The detail has not hit the press yet, and probably will not this side of the election - for obvious reasons.
- Dave Davies, Basingstoke, Hants
Monty - If there's any pension left to tax mind - last year the Teacher's Pension Scheme (actuarial estimate) was that it alone was £140billion in deficit, with gold plated MP pension and the rest of the civil service in huge deficit too, neither the public or private sector will be able to contribute quick enough to meet this balooning debt as it falls due - now there is a disaster waiting to happen!
- Wallytrader, London
Never mind 90% whats wrong with 100%. - Michael Warren, London
Michael - Only a moron could make such a suggestion.
- Dave Davies, Basingstoke, Hants
Labour MP Lindsay Hoyle obviously has not got two brain cells in her head.
The city would empty.
The money would go.
Britain would end up like Zimbabwe.
As Delboy would say 'what a plonker'.
- Derek Grieve, Barnet
Doh! The jobs will just go abroad if you put punitive taxes on them. Goldmans are not doing anything wrong. They are simply doing what they did before with lower leverage. The real probl;ems only came when the investment banks went to the SEC in 2004 and were given carte blanche to go mad on leverage. And Goldmans is only able to make these profits with low leverage because every one else has shut down prop trading altogether. The government banks have swung too far in the opposite direction. They are slow and excessively risk averse. Goldmans makes them look stupid, which is why the MPs are so cross.
- Chris, London
MPs ought to be made sell their second homes and return the proceeds to those of us who paid for them - i.e. the tax payers.
- R.F., Yorks, UK
Yes why not - and a tax of 90% of MPs expenses (benefit in kind) should equally be applied.
- Wallytrader, London
What sort of fool comes up with an idea like this?
First Problem - Define "generally excessive" in a practical rather than emotive manner. Consider payments in other global jurisdictions and the "excess" becomes even harder to define.
Second Problem - The business and those "big bonus earners" will move outside the UK as soon as these proposed rules are introduced. Net effect ZERO UK tax paid on personal income and corporate profits, just when HMRC needs every single penny to pay the bills of this awful government.
However, Paris, Frankfurt and Zurich will be jumping with joy at this news.
Bring on the election before these fools do any more damage.
- Dave Davies, Basingstoke, Hants
Don't forget 90% tax on public sector pensions.
- Monty, London
What a wate of time, all that would happen is that the bonuses would be higher to accomodate the tax.
Maybe the MPs are trying to get a share of the goodies on offer.
- Sosavvi@Aol.Com, London
MP's and Bankers brought the financial world to its knees through sheer greed.
What has changed? NOTHING. ABSOLUTELY NOTHING.
ABJECT SPIN AND WAFFLE FROM THE GOVERNMENT.
MP's AND BANKERS CONTINUE TO RIP-OFF JOE PUBLIC.
- Reuben Camara, Republic of Morecambe, UK
Oh Dear oh dear!
Labour have really lost the Nu bit big time! Bonus's are paid out of profits, Goldman Sachs got no hand out from Gordon Brown AND they made healthy profits, again. It is a private business and they have asked to repay their TARP funds. Obama [Nu Labor USA] doesn't want to let them. Why? Because he wants control over the private sector... go figure. When Labour has finally wrecked the City completely before the next election then their mission will be complete .. last one not on benefits turn the lights out before leaving please..
- James Macleod Ritchie, Oyster Bay Cove
Never mind 90% whats wrong with 100%.
- Michael Warren, London
I agree with these proposals. There is a solution to the current crisis. It is called socialism.
- Matthew, Stoke Newington, London UK
If and when bonus's are going to be paid out by banks AGAIN is outragous. They should be made to give it to charity. But of course, they might do that!!!!!
- Mary Neicho, colchester, england
you have got to love these MP's. What better way to take the spotlight off yourself than by pointing the finger at Bankers. The entire system is totally corrupt.
- Uvie, Beckenham, UK
Labour introducing a new tax? Never!!!!
Desperate measures by a desperate government.
- Simon King, London
>>Bankers should be hit with a punitive 90 per cent tax on bumper bonuses, MPs demanded today.
Oh dear, the Labour party politics of envy and jealousy surfaces again. How about a 110% tax on illegal expense claims? 150% tax on the profits made on second homes? 250% tax on income from directorships.
- Adam, Harrow, UK
About time,and this should go for all bonuses.The rich have been rapeing the wealth of this country for years,living the high life of the blood and sweat of the working class.Next is to do away with the sick Council tax which was invented by the Rich to ensure the working class work only to stay alive.
- David, london
Whilst it is somewhat offensive if the bank has NOT required any form of state funding to survive then the banks can give whatever bonuses they like. What is wrong is that government controlled banks are even allowed to contemplate bonuses until such time as the government has been repaid and the banks have started to lend money at a reasonable rate to the general public who are bearing the brunt of their mess. I can't see how taxing at 90% achieves anything.
- Andy, London
So if politicians can now decide how much private sector employees should be paid (not just those banks under Government control) why should we not have a say in how our politicians are paid? Any MP that does not have a 100% attendance rate in parliament, let's knock them 10% of their salary. Any minister moved aside for incompetance, let's take away the pension they've earned as a minister.
- Adam, London
Great idea provided MP's are also taxed the same amount on the "profits" they make on their 2nd homes
- Ayylyn, Orihuela Costa
