Bonus Tax - Who's Next ? Europe & US Weigh Up Options

Reuters reports that UK Prime Minister Gordon Brown has urged the rest of the European Union to follow his lead and impose a one-off tax on bank bonus pools.

And The Financial Times reports that France has already indicated that it is likely to follow suit. The newspaper says that a bonus tax had been under consideration for some time, but French authorities were concerned that a unilateral move could damage the country's reputation as a financial centre. Now that the UK has taken the initiative, it seems France is highly likely to impose a similar tax. 

German banks and insurers, however, have come together and confirmed that they plan to exercise pay restraint this year. The financial institutions hope that this will mean that German authorities will not need to implement a bonus levy - something that German Chancellor Angela Merkel has described as 'a very charming idea'.

In the meantime, The New Yorker reports that, with his approval rating dropping below 50%, US President Barack Obama is likely to be muling over a bonus levy as a means to regain some popularity.

The New York Times reports, however, that one politician who is all for big bonuses is New York Governor David Paterson, who said Wednesday: 'Some people think that if you deny the bonuses, that the money's coming back to the American taxpayers. It's actually the other way round. If you deny the bonuses, the money stays in the firms. It's when you pay out the bonuses that you start to get the huge tax collections that New Yorkers see....We need to stand behind the engine of our economy in New York, and that engine is Wall Street'.

Finally, Dow Jones Newswires reports that Canadian Finance Minister Jim Flaherty has said that Canada fully expects to comply with the G20 guidelines on bonuses.

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