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.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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