More Tax On Bonuses ? We Already Pay 70%

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The Financial Times quotes John Whiting, policy director at the Chartered Institute of Taxation, who points out that, taking into account existing higher-rate tax levels, national insurance, and VAT on goods and services purchased with pay awards, UK bankers are already paying some 70% in taxes to the government.

And that's not counting council tax, tax on petrol, cigarettes and beer, congestion charges, parking permits and all the other stealth taxes bankers (and everyone else) based in the UK pay.

And as UK bankers anxiously await Chancellor Darling's pre-budget report Wednesday, many have expressed deep concern over the possibility of either a supertax on banker pay, or a windfall tax on the banks themselves.

Here are some of the comments:

'It's blatant electioneering from the government. It's not a clever thing to do - to drive the people who generate money away from the country'.

Ronnie Fox, Fox Lawyers (Bloomberg)

'We hope that the government would not be looking to a regime which would discourage businesses from staying in the UK'.

Lesley McLeod, British Bankers Association (Reuters)

'It's very important to recognise the importance that major financial centers are balanced in terms of regulatory efforts around capital, around accounting, and around compensation....During this period of regulatory reform, we really need to make it a race to the top, not a race to the bottom'.

Bob Diamond, President, Barclays Bank (Bloomberg)

In the meantime, The Times reports that 'a handful of senior traders' at RBS Sempra Commodities (51% owned by Royal Bank of Scotland) are said to be in line to share out some $40m in bonuses this year-end. You can almost hear the outcry already.

And The Financial Times reports that Nomura is reviewing its compensation policies to ensure that they are as equitable as possible. Several hundred former Lehman bankers (taken on by Nomura last year) received 2-year bonus guarantees (which run-off at the end of the year), and the huge pay-outs many received for 2008 are known to have upset some existing Nomura staff, who felt that they were being disadvantaged.

The Daily Telegraph reports that UK gilt traders are looking at bumper bonus payouts this year, as the gilt market has 'flourished', mainly due to the Bank of England's quantitative easing initiative and its impact on the secondary market.

Finally, Bloomberg reports that US pay czar Ken Feinberg looks set to raise the $500,000 salary limit for certain AIG executives, after a number of senior employees last week threatened to walk.

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