UK to tax bankers’ bonuses

Darling.jpgUK Finance Minister Alistair Darling is widely reported today as being about to announce a ‘super-tax’ on bonuses paid to bankers working in the UK.
The government’s argument, notes the BBC’s Robert Peston, is that “Investment banks are making exceptional profits, as a result of the intervention of government and the Bank of England to limit the economic damage from the mess caused by those very same banks. So it would be outrageous if they paid those profits to employees and bonuses. We are determined to prevent that.”
Darling was the first western minister to warn of the likely end of the Boom period in August last year. He was widely derided at the time for suggesting that the downturn “will be more profound and long-lasting” that most people had expected. But he was, of course, proved right by events.
Similarly, it will be argued that bankers can easily retain their bonuses by moving abroad. But those who relocated last year to Dubai might now regret their decision. And given popular anger at the mess caused by the banking crisis, and the need to raise taxes, the blog suspects that other countries may well follow his move in coming months.

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