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Alistair Darling won’t row back over bonuses supertax
Paul Waugh, Deputy Political Editor15 Dec 2009
Alistair Darling is set to extend the scope of his supertax on City bonuses despite pleas from banks for special deals to water down the impact of the levy.
The Chancellor is determined to resist demands from leading institutions to cushion the impact of the 50 per cent tax and will instead shrug off threats from some to relocate out of London.
Mr Darling has flatly rejected requests from three international banks - which the Treasury refuses to name - to strike bilateral deals to cut their exposure to tax.
Rather than backing off, Mr Darling is expected to extend the range of the supertax to ensure that N M Rothschild and other banks with non-standard year-ends do not slip through the net.
Rothschild had been due to avoid the tax because, unusually, it pays its annual bonuses in June - two months after the one-off levy is due to end in April next year. And to placate rival banks, the Treasury is now set to forestall any accusations of favouritism. Business Secretary Lord Mandelson has stayed as a guest of Lord Rothschild both in the UK and in Corfu. John Kingman, the Treasury official in charge of taxpayer stakes in the banks, is due to join Rothschild's shortly.
The Treasury and HM Revenue and Customs are to meet bankers tomorrow to ram home their determination to push on with the tax.
Mr Darling's tax is popular with the public, although a weekend poll showed that 85 per cent of people thought bankers would evade it.
The Standard revealed yesterday how City traders Tullett Prebon have promised to cooperate with employees who want to move abroad to avoid the new tax, as well as the 50p income tax rate that comes into force from 2011.
Mr Darling has been deluged with claims by banks that the tax would raise far more than the £550million that he predicted.
Reader views (26)
If Darling was concerned about excess profits in the banking industry he could encourage financial competition instead of destroying it.
- Jeff, London, 20/12/2009 21:17
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Do people realise that very few banks have actually been bailed out? So a whole industry is being penalised for the incompetnency of a few banks and also the incompetency of the Labour government and FSA who helped to get us into this mess in the first place. It doesn't seem fair to me that banks who did not take tax payers money or take big risks are penalised for those that did. I bet you the FSA still get paid bonuses despite their incompetence at regulating the industry and we all know that the government has their nose in the tax payers trough so no penalties for their incompetence either (until the next election I guess).
- Janine, London, 16/12/2009 10:04
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Its odious people like james who have really screwed the country. They gamble with other peoples' money, and are so "talented" that they couldn't recognise the largest bubble in history until it burst. They then get bailouts in the trillions, putting us all in debt for years to come, and threaten to leave the country if they have to pay higher taxes (taht half of them spend their time trying to avoid in any case).
Please James, where are you going to go? Most EU countries have higher taxes and small financial "service" sectors, Dubai is in a spot of trouble (over-priced but essentially worthless property). Arrogant, sociopathic gamblers, who wouldn't know the true value of anything at all, just the price, the 21st century version of spivs, but without the charm.
You are not talented, you're just lucky. You might work long hours, but so do doctors, nurses, teachers, engineers, and they do their jobs for a salary and do not get bonuses.
We've seen through your laughable claims that you are good for the country. You're not; your short term attitude to everything has done more to destroy industry and innovation, real engineering not the financial version, than any government.
Go, ciao, au revoir and adieu. Don't come back. You will not be missed.
- Rob, London, UK, 15/12/2009 17:03
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Didnt Brown go to university? just wondered as he made hald a dozen spelling mistakes in two sentences he wrote to a mum who lost her son...He sold the countries gold reserves at 150 dollars an oz it is now over 1000 dollars..he instigated the fall of our final salary pensions the list goes on his first eight budgets had a total deficit of 40 bio approx and now in just one year we are have a deficit of 200 bio you get the picture....the City like it or not provides according to IFS one third of total tax take in this country...so if you want to play poker with them be my guest but if you do be aware that if you loose the income per capita in this country will gravitate towards that of Somalia...over to you GB
- Tom, uk, 15/12/2009 15:57
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Kate from London. Bankers may or may not be idiots but one thing they do not do is squeal. Behold RBS - the first in Government's firing line to please the popilist mob. Treasury talks about bonus caps + EC talks about forced asset sales. Many bankers quit to join competition. RBS share price plummets, wiping over £15 billion off the value of the Government stake - stake it is managing on behalf of British taxpayers. Behold Lloyds - target number 2. Eager to avoid following in RBS footsteps, the bank is preparing to pay out bonus pool in full to retain people. Mr Darling will get his tax - but not his wish of getting the bank to keep the cash towards capital and rethink comp scheme. Behold US banks set to relocate their EMEA teams out of London, depriving UK Treasury of more revenue. Ditto Tullet Prebon. Also ICAP. Punitive tax has nothing to do with regulation, whether light or heavy. No one is squealing. Every action has to be judged by its consequences, not intentions. Presently, they are not shaping up well for the British taxpayer.
- Legal Immigrant, London, 15/12/2009 14:10
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Banks have a choice in how they spend their money. They can take additional reserves against specific as yet to be determined losses and simply tell staff that they will have to wait until next year for a bonus. They can "indicate" what their bonus might have been had the loss provision not been taken. Once the "one off" tax has passed then the banks can suddenly find that the losses have not materialised and write back the provisions [banks do this all the time, even under normal circumstances]. The fact is that there are actually likely to be legitimate significant unprovided losses as yet still to be recognised so this isn't a scam. The head of the IMF actually indicated that there were 1.5 Trillion of losses still out there still to be written off so this is not supposition on my part. This would blow the Trotskyites in Nu Labor out of the water. Go on Darling do a proper job of screwing the economy, you are only half way there!
- James Macleod Ritchie, Oyster Bay Cove, 15/12/2009 14:07
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Oxymoron: talented bankers.
All they are doing is privatising gains and socialising losses.
- Darren, london, 15/12/2009 14:00
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Bankers are idiots. They should have spent the last year cultivating the Government, instead of announcing bonus pools and breathlessly saying that they will leave if they are not regulated or taxed in the way they require. When the going is good, they ask for little regulation. When it gets bad, it is a failure of regulation and Government. Now there is a modification of their behaviour, they squeal about in the press in the most childish way. Now instead of Government chasing after them, the boot is on the other foot. Get some good PR before the rest of proposed government policy hits the sector. This tax is a very small beginning. It can be changed - but the presumption is that there will be change. Trying to create exceptional deals now with the Treasury is a huge mistake and betrays how foolish the management of banks have become.
- Kate, London, England, 15/12/2009 13:46
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I suppose it has to be said that reading these comments the bulk of the UK population are total morons. Around 33% of the UK tax take comes from Investment bankers. They are different to the morons at RBS. Making them leave will damage the UK's tax take, so guess what morons, your tax goes up.
The Labour government has a regulatory body, the FSA/SFA (it keeps changing its name) which is supposed to monitor odd things like house prices rising at 20% pa and tell the government to raise tax rates until what is going wrong can be ascertained. However, it was not in the government's interest to do that as as Prudence Brown made clear, he had vanquished boom and bust.Blair wanted reelection at the price of gagging the regulatory body.
Investment bankers arn't to blame for this mess, Labour is. All they are doing is finding scape goat and then trying to get popular support by attacking it. They know the departure of the bankers will damage the economy, but they don't care as they want a hung parliament.
If the UK population believe the same government that lied to them over Iraq in this case, they really do deserve the destruction that the Labour party has wrought.
- James, Norwich, UK, 15/12/2009 13:38
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Well said Tojo "This is the one country that rewards failure!"
Bigger bonuses for those who create toxic debt.
- Mick, London, England, 15/12/2009 13:10
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What a lot of people have failed to grasp is that if you, got a bonus pot under normal PAYE 48.55% goes to HM Gov already, so we are only talking about in additional revenues 1.45%. Probably not even the equivalent of our Third World aid budget so it makes sense to me not to pay that for a few of years until we get back our feet.
Now banks won't pay these bonuses so any profits they have made will be swallowed up by PY losses, which will equate to £Nil take for the Treasury.
Still it's easier to blame bankers but don't forget the Gov. allowed these practices to go on and encouraged debt and made it a lot easier for people to write-off their debts by relaxing the bankruptcy rules. The failure of the banking system is not solely the bankers fault, although it does provide a convenient smokescreen for an incredibly inept Government.
- Mark, South-East London, 15/12/2009 13:01
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James,
You typify the reason why the general public hate bankers. You spout classist diatribes from what you actually beleive is a position of intillectual superiority when all your words do is highlight your stupidity. The problem is, you are not superior in any way and only assume you are because you are paid a stupid salary for playing in a glorified world casino.
If you guys actually paid something towards this country instead of spending all your time avoiding tax, there would not be a need for high taxes for the rest of us. The more you try and riggle out of it, the more likely the government is to come down harder. In all honesty if the Country is poorer finacially from your absence it would certainly be wealthier in terms of pride and values with you gone. Good luck abroad. We won't miss you.
- Angry Man, London, 15/12/2009 12:58
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Darling and Brown understand wealth creation well enough - these are very smart people. Therefore they also understand that only Micks of London can get them elected - or at least give them a hung parliament. Now, how much Micks from London understand about wealth creation is evident from his posts. I am agog with excitement when he actually tries to explain how exactly the "bankers wrecked the economy" and where his dole will come from one Treasury revenues from FSI dwindle. Not from the Government, I am afraid - it is already broke.
- Legal Immigrant, London, 15/12/2009 12:54
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Darling & Brown do not understand wealth creation becasue they have never created any. They are old style labour mired in the redistributionist politics of the Student Union and outside academia, think tanks & politcal party activity, have never done a "real job".Their only goal has been the elixir of power & they care not whether they destroy the country in the process provided they can create policies that appeal to their class-envious core vote.
- Dalstonblogger, London, 15/12/2009 12:37
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Spot on James.
As for Mick, who thinks the bankers don't do real work, just see what would happen if there weren't any. At least they pay real taxes, unlike a large proportion of the long-term welfare claimants and bogus asylum seekers Gordo and his friends' policies have encouraged. Who do you think is going to foot more of the bill for them when the bankers have gone?
Sad to relate, NuLab's education policies have succeeded: they have created an electorate too ill-educated to make any kind of informed judgment about their leaders.
Perhaps we do need things to get worse before the muppets get the point...God help us all.
- Henrydz, London, 15/12/2009 12:29
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This is the one country that rewards failure!
- Tojo, Hythe,Kent, 15/12/2009 12:21
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I can't wait for the next election so we can witness Darling rejoining his beloved circus or perhaps returning to the village thats been lacking an idiot,-all the clowns found a natural home with Labour twelve years ago,now its time to get the spinning bow ties and size 20 orange boots back out of their box!.
- Jacob, Bent Kent Region1648A EUSSR., 15/12/2009 11:46
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The sooner these traitors leave the country the better. Their greed and incompetence wrecked the economy of this country diminishing the hard earned savings of the British people who do real work. Their passports should be revoked as they leave so that they cannot come back and do any more damage.
- Mick, London, England, 15/12/2009 11:45
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This is incredible. Darling has had to bring in this bonus tax (that will be completely dodged) to try to rope money back in from the very culture that Gordon Brown created while he was chancellor and presided over as PM.
Bring on June 3rd, or May 6th, or March 25th, or whenever the PEOPLE actually get to do something about all of this.
- John, Sussex, 15/12/2009 11:44
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I don't work in the City or in the Finance industry... But I do think this new tax is a massive mistake.. People don't seem to realise how much money the exchequer makes from the City of London, and if just a small proportion of companies choose to leave the COL this is going to massively affect the taxes that are made... It's unbelievable short-sighted for people to think this is going to make the slightest difference... The sooner we get rid of this government the better imho.
- Jim, London, UK, 15/12/2009 11:36
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Well it seems ok to expect pensioners to pay more through higher VAT when the tories doubled the rate to subsidize themselves with cuts in high tax rates but not to tax bonuses by bankers.
Anyway, the Chancellor showed a way of avoiding this tax with his cut in bingo duty. All the bankers need do is hold a game of bingo and the prize money would be bu co-incidence the same as their bonus. Everyone would have cards with the same numbers on to ensure winning and because they won the money it might not be liable to income tax! So there "Everyone is a winner..."
- Melvyn Windebank, Canvey Island, Essex, 15/12/2009 11:34
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The idiot chancellor and his even more dense boss don't understand that its everyones pension that will be hit. If the banks and institutions pay this tax they'll simply claw it back from the returns they give their customers. The public are also stupid for backing it. To be fair its probably mostly labour luddite voters who want this.
- David S., Burgess Hill UK, 15/12/2009 11:09
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James, let it go. You'll never convince this bunch of brainless muppets. The mass unwashed haven't got a clue.
Those who say sack them all, I'll do the job for xyz - well frankly, if they were good enough they already would be working in IB.
The fact is, most of them don't have a clue. Leave them be. They'll be paying the price sooner or later while those who can will be in sunnier climes ...
- Sarit, Hong Kong, 15/12/2009 11:05
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Well said James, totally agree with every point you make.
- Richard London, London, 15/12/2009 11:01
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The 50% tax levied on bankers' bonuses is just and fair, It is just a cut of the bonus which the taxpayer is entitled to for bailing out the banks. (ie.a 'bonus' to the taxpayer which the taxpayer has earned, more so than the greedy bankers.) No matter that some banks did not need bailing out; it was the entire banking system that was saved, so ALL banks must pay. In fact I would say that it is economically and morally right that the taxpayer that should receive a bonus and not individual bankers who risked NONE of their OWN money and yet expect an extortionate reward for just 'being employed' by an insolvent banking system which they could do nothing to help rescue.
- Michael, London, UK, 15/12/2009 10:37
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"Mr Darling's tax is popular with the public, although a weekend poll showed that 85 per cent of people thought bankers would evade it."
This is defiantly a case of turkeys voting for Christmas.
Whist the public and politicians are baying for blood lead by a rabid mob of soap-dodgers that would not understand what earning a wage is, the rest of you lot will be stuffed because, come next year you will have to pay for the shortfall cased by the mass exodus of bankers with talent and banks that employ their talent.
How will this affect you, well the great unwashed out there will have benefits slashed, we all agree that’s a good thing, hosing benefit will also be cut many of you will think that is a good thing providing illegal immigrants are hit first.
Reality is that Pensioners will be hit hardest. Pensions in real terms have bee cut savagely over the last ten years whilst their outgoings such as council tax, fuel, transport has been going up. pensioners get buss passes, not for much longer. Pensioners will be means tested so only the rich pay. No only those that have no income ie where they have not made any financial provision will get pensioner benefits.
Its time that you feckless work-shy layabouts recognised the benefit of high earning ambitious people in the UK that fund the benefits system so you don’t have to. I would not want to have a pensioners death through hypothermia on my conscience this winter, would you?
- James, City Of London, 15/12/2009 10:28
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