Bonus tax 'unpopular' in City

Date: 16th December 2009

The planned super-tax on bank bonuses announced in the Pre-Budget Report represented a "political attack" on the "big-paying" financial services, according to a City expert.

Rob Moulton, a partner at corporate law firm Nabarro, also said that the move would be seen as "very unfair" by the bankers themselves.

Chancellor of the exchequer Alistair Darling announced the move as a one-off 50 per cent levy on all annual cash bonuses of over £25,000.

The tax will be paid by the banks themselves rather than the individual bankers.

Brokerage firm Tullett Prebon reacted to the change by issuing a company-wide email offering advice for staff who wanted to emigrate to other countries where the tax was not inforced, in order to protect their earnings.

Mr Moulton said: "It's a political attack on big paying financial services rather than a targeted attempt to raise money or to get a contribution from people who have actually benefitted from the government's financial support.

"It is probably a blunt instrument in terms of lessening the chances of the UK taxpayers being damaged by the banking sector. For the longer term health of the UK economy it might be counter-productive but it is too early to say. Time will tell."

Posted by Anthony Burns