Banking chiefs will try to convince the Treasury to drop the new 50% tax on bankers’ bonuses by offering a combined contribution to the exchequer of £2bn instead.
Alistair Darling announced the new one-off tax on bankers’ discretionary bonuses over £25,000 in the Pre-Budget Report earlier in the month.
Banks have warned the Treasury the introduction of the bonus tax could lead to an exodus of talent from the financial sector.
In a bid to avert this and to protect the banking industry in the UK, senior bankers are thought to have offered the Treasury this week almost four times the £550m Darling thought he could raise from the bonus tax in a bid to stop the tax being levied.
The banking chiefs have been trying to convince the Treasury that more money could be raised through voluntary contributions rather than through a tax.
The Treasury refused to comment on the lobbying efforts by banks but a spokesman told the Guardian: “The government is going to implement this tax as announced.”
Meanwhile the British Banking Association met with the Treasury to try and clear up confusion about which organisations will be covered by the new tax if it is introduced. The tax is aimed at bankers, but fund managers, hedge funds and IT experts could also be affected.
Banks angry about the proposed new bonus tax are also thought to be holding up progress on a £1bn fund to help small businesses, the Times reported.
At the Labour Party conference in September, Brown announced plans for a National Investment Corporation (NIC) to support small businesses that were struggling to get loans from commercial banks.
In total, £200m of the £1bn fund was expected to come from eight overseas investment banks, including Citigroup, Goldman Sachs and Morgan Stanley – which each would have contributed £25m.
However, following the announcement of the bonus tax earlier this month, the banks are now said to have cold feet about supporting the investment fund, and the Treasury had to meet the banks on Wednesday to try to persuade them to commit to the growth fund.
It is now thought that no agreement will be made before Christmas.