Banking industry criticise Treasury’s plans for windfall tax

| December 7, 2009 | 0 Comments
”Banking

Over the weekend, it emerged that Chancellor Alistair Darling is expected to announce a windfall tax on British banks in Wednesday‘s Pre-Budget Report.

The measure is one of many being planned by Mr Darling to target high earners. Other measures include increasing the number of people liable to pay inheritance tax, as well as an increase in capital gains tax.

However, the plans have met with criticism from the banking industry today after it warned that the tax would harm the City’s reputation as one of the world’s largest financial centres.

Angela Knight, the chief executive of the British Bankers’ Association (BBA), said: “We need to think not just about the individuals but about the business that will be done elsewhere.

“We need to think about the message this will send outside the UK about Britain being a place to do business in,” added Ms Knight.

Defending the windfall tax, the Chancellor is expected to argue the case for taxpayers since billions of pounds of public cash has been used to bailout the financial sector.

The news comes as The Sunday Times reported yesterday that over 1,000 investment bankers have left the Royal Bank of Scotland (RBS) after a heated row with the Treasury over bonuses.

RBS, which is soon to be 84% owned by the taxpayer as a result of its participation in the Government’s Asset Protection Scheme, said it was planning bonuses of £1.5 billion to staff in its investment arm for its performance in 2009.

The bonus pot is around 50% bigger than that in 2008 and would give 20,000 bankers the equivalent of three times the national average salary each.

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