Britain to Levy a One-Time Tax on Banker Bonuses

[MannyGoldstein]

Source: The NY Times

The chancellor of the Exchequer, Alistair Darling, announced a one-time tax on bank bonuses Wednesday, part of the government’s effort to shore up the still-weak British economy.

The tax will be levied on 2009 bonuses of more than £25,000, or $40,800. It will be imposed on the pool of bonuses paid by a bank, rather than individual payments, and it will be paid by the bank — not by the recipient of the bonus. It will take effect immediately and will affect banks’ 2009 profits.

The levy represents the most direct attack on bank bonuses anywhere in the world. All banks in Britain – including the London-based subsidiaries of foreign banks — will be affected, whether they took government funds or not.

“Last year banks made £80 billion in losses,” Mr. Darling said during a pre-budget speech to Parliament that was frequently interrupted by howls of protest from members of the opposition Conservative Party. “But if they insist on paying substantial rewards, I am determined to claw money back for the taxpayer.”


Read more: http://global.nytimes.com/

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Wow. A government that gets it - we bail you out, you don't pay yourself with the cash.

[mbperrin]

1. Good. Now, all those fiscal hawks looking for ways to close the deficits,

are you paying attention?

[OhioChick]

2. Good. Someone "gets it." n/t

[Rage for Order]

3. How does this help?

Seems to me, all the banks need to do is wait until January 1, 2010 to pay bonuses and they don't get hit by the tax.

:shrug:

[muriel_volestrangler]

5. It applies until April 5th, 2010 (end of the UK tax year)

http://www.ftadviser.com/FinancialAdviser/Regulation/Regulators/Treasury/News/article/20091210/f590e00e-e4d9-11de-ae62-00144f2af8e8/Banks-to-pay-super-bonus-tax.jsp

And for a banker, that's the medium term. For the government too, for that matter - that more or less takes them up to the next election.

[muriel_volestrangler]

4. Sarkozy Said to Consider Bank Bonus Tax, Following U.K.’s Brown

French President Nicolas Sarkozy is considering a tax on 2009 banker bonuses exceeding 27,000 euros ($39,800), following U.K. Prime Minister Gordon Brown move to impose a one-off levy in the U.K., said two French government officials.

The banks would pay the charge, though the amount hasn’t been determined, said the officials, who declined to be named because they’re not authorized to speak to the press. Tax cuts passed under Sarkozy limit French households’ total tax payments to 50 percent of income.

Sarkozy and Brown are due to meet today before a European Union summit in Brussels, calling a truce in a fight over EU financial regulations, after they joined to push for a “new global consensus” to regulate “opaque” markets. A one-off tax on bonuses should be a “priority,” they wrote in a joint column in today’s Wall Street Journal.

“It is simply not acceptable” for taxpayers “to foot the bill for losses in a deep downturn, while institutions’ shareholders and employees enjoy all the gains as the economy recovers,” they wrote.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aCfyL2T0EjgY