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UK to tax bank bonuses at 90%

Consumer demand, Economic growth, Financial Events, Leverage
By Paul Hodges on 10-Dec-2009

bonus pig.jpgThe more things change, the more they stay the same“. Or, as the blog’s French-speaking readership might say, “plus ça change, plus c’est la même chose“.

When the blog started work in the chemical industry, in 1978, it was possible to pay up to 114% of one’s income as tax in the UK, if one was a very high earner. That regime was swept away by Margaret Thatcher after the 1979 election.

But now governments need to quickly increase their tax revenue. Thus the UK government has confirmed plans for a new 50% ‘super-tax’ on bank bonuses, in addition to the normal 40% top rate. Of course, it is described as a “one-off” tax. But then income tax itself was originally introduced as a “one off” tax in 1799 to pay for the UK’s war with France.

Bankers are already muttering about leaving to go somewhere else. But where? The list of countries in severe financial trouble as a result of the financial crisis is rising all the time – last week it was Dubai, then Greece on Monday, and now Spain is having ‘crisis’ cabinet meetings.