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Darling to hit bankers with windfall 'supertax'
9 Dec 2009
Alistair Darling will announce a major raid on the City and plans to harvest more tax from the rest of the public today, as he delivers his crunch Pre-Budget Report.
The Chancellor is expected to unveil a series of measures designed to raise revenue as he admits that the Government's finances are in even worse condition than previously thought.
The centrepiece of the package will be the widely-leaked proposals for a one-off windfall "supertax" on banks' bonus pools, intended to recoup some of the billions of pounds spent shoring up the financial system.
But the Guardian reported that Downing Street would also risk further escalating tensions with the City by publishing a document outlining the case for a transaction tax on all trades.
The ideas have drawn a sharp response from the president of Barclays, Bob Diamond, who suggested they could lead to an exodus of talent.
According to the Independent, Mr Diamond told a conference in Sussex: "Both financial capital and human capital are extremely mobile.
"In terms of compensation it's great politics and it's great media. We don't feel that (a tax on bankers' bonuses) is supported by the principles that were adopted (by the G20)."
Alongside populist moves to hammer bankers, Mr Darling is expected to confirm that economic performance has been worse than thought this year and public borrowing will rise even higher than the previous estimate of £175 billion.
There is not likely to be much new information about departmental budgets, which are largely set until 2011, with the Government committed to maintaining spending.
But he will use the statement - his third as Chancellor - to give some more details of how he intends to meet the commitment in its Fiscal Responsibility Bill of halving the debt within four years.
Personal allowances are expected to be frozen, bringing thousands more into the higher rate of tax, and some analysts believe that he could signal future rises in VAT.
A scheduled increase in the inheritance tax threshold from £325,000 to £350,000 is also likely to be postponed. That move would be politically resonant, given Gordon Brown's claim that Tory plans for IHT cuts have been drawn up "on the playing fields of Eton".
Employer, employee and self-employed national insurance contributions of 0.5 percentage points scheduled for April 2011 could be brought forward to 2010.
Mr Darling may have better news for green taxpayers, with experts predicting tax rebates on electric cars, home wind turbines and solar panels.
Electricity sold to the National Grid by home micro-generation could be exempted from income tax, while the 9% tax on electric-powered company cars could be cut to 5%.
At present only 50 of the 1.1 million company cars in Britain are understood to be electric, even though they attract tax well below the rates of up to 35% for fossil fuel cars.
Reader views (3)
So, the government allows an unregulated banking system to lend money it does not have to people who cannot pay, and it then allows hedge funds to package up all this vapid finance and re-sell to the same banks who threw away the money in the first place? And Darling wants the taxpayer to sort out the mess?
You can forget the Iraq enquiry, as we will never see Blair in the dock for his war crimes. I would rather see Brown and Darling up before the beak for their gross mishandling of the public finances over the last 12 years. I bet Cameron and Osborne are shaking at the thoughts of getting the keys to their new Downing Street homes next May...
- Nobby Clark, Perth, the Scottish one, 09/12/2009 12:12
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"as well as scrapping personal allowances for people earning above £100,000."
Which will, when you include the NI increase, create a marginal tax rate of 61.5% for people earning around £ 105-115k.
If your income is around that level and you get a pay rise you ain't going to be left with much! What incentive is there to work for 39.5% take-home!
- Mark, South-East London, 09/12/2009 11:08
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The Pre Budget report is a Labour creation to find out who screams loudest before the actual Budget in March and to pick up the banana skins which continually dog Labours' legislation path Having a third rate politicised Civil Service to monitor Bills is half the problem.
- Mikem1, brightlingsea england, 09/12/2009 09:33
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