Tax on bankers’ bonuses likely in pre-budget report

The government is reported to be considering raising the national insurance contributions of banks and introducing a super-tax on bankers who receive bumper bonuses.

Chancellor Alistair Darling is expected to use the pre-budget report, which will be presented to the Commons on Wednesday, to outline new measures aimed at preventing banks from paying excessive bonuses to staff.

Darling is expected to say that a super-tax should be levied on bankers who receive large bonuses because billions of pounds of public cash has been used to bail out the banks and so taxpayers have a right to a larger share of bankers’ bonuses.

The Chancellor said over the weekend that the public expected “the broadest shoulders to bear the greatest burden”.

But John Whiting, tax partner with PricewaterhouseCoopers, told the Times that it was unprecedented for a particular occupation to be targeted in this way. “It smacks of discrimination,” he said.

The British Chambers of Commerce (BCC) warned that a tax on bonuses would drive out of Britain the talent which is needed to stimulate growth, the Telegraph reported.

David Frost, director general of the BCC, said: “The very people we need in this country to create wealth could be located anywhere and will simply go somewhere else.

“This is the very time that we need as much business in the UK as possible.”

It is thought Darling could also announce an increase in National Insurance contributions for banks that pay big bonuses, or alternatively a direct tax on investment banks.

It is thought a windfall tax could raise over £1bn a year and would not just be applied to British banks but also to British arms of overseas banks like Goldman Sachs and JP Morgan.

Shadow chancellor George Osborne said he “wouldn’t rule out” a windfall tax on bonuses, but would prefer reforms to make sure banks paid tax on future profits.

He told the BBC: “My message is clear – when the banks start making profits again they should start paying taxes again.”

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