Wednesday, December 09, 2009

Bankers howl as bonus tax introduced

In Britain's budget, Reuters reports:

"banks would be charged a 50 percent tax rate on bonuses they pay to their staff above 25,000 pounds starting today until April 5, 2010, a powerful disincentive for big payouts in this year's Christmas bonus round. The new tax would apply to all banks, building societies and branches of foreign banks operating in Britain.

The government hopes the move will encourage banks to use additional cash to shore up their capital bases, rather than pay high salaries."

It's a good start. This bit -- including no corporation tax relief -- looks good, it should be possible to put in strong measures to stop dodgers, and some interesting moves on offshore tax evasion. A higher windfall tax would have been better. Of course bankers, many of them groaning with a sense of self-entitlement, are howling.

"This is extreme victimisation," says one.

Get used to it. And let's hope there's more like this to come. Let's start with the United States.


Blogger Physiocrat said...

This is just another example of how the British government - whether it Dum or Dee in charge - is unable to establish anything like a coherent and strategic approach to policy on any issue at all. All it does is to respond to events and the tabloid-fuelled hysteria that grows up around them.

This approach to legislation by hasty response to hysteria seems to have arisen from about the time that Thatcherism had spent its force. The poll tax was probably the turning point, when it was hurriedly replaced by a botch-up, the problems caused by which are still leaving local government starved of funds whilst helping to fuel the house-price boom of the mid-2000s. At a trivial level we had the furore over Pit Bull Terriers, followed by botched, rushed and useless legislation. The disastrous involvements in Afghanistan and Iraq were essentially in the same vein.

There is a real problem which is how and why are the banks getting their hands on these huge revenue flows at all? What do they represent? Almost nobody is looking at underlying causes or even showing any curiosity on the matter.

Come on TJN, look beyond the immediate issues, push the boat out and take in the broad view that can only be seen from a distance.

12:44 pm  

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