Bankers acting to avoid bonus tax
Updated on 08 December 2009
Bankers could face a tax of more than 50 per cent on their bonuses after tomorrow's pre-budget report - but as Channel 4 News finds, some are already seeking legal advice on avoiding the rumoured charges.
Chancellor Alistair Darling is expected to announce a windfall tax on bankers in tomorrow's pre-budget report.
But Channel 4 News has learned that some employees are already taking advice on the changes.
Not only that, but the recruitment market in the City is booming as head-hunters target disaffected financiers.
Chairman of the Commons Treasury Committee John McFall spoke to Channel 4 News about a tax on bonuses.
"I think in the short term if the government do not get what they are looking for here there has to be a longer case to change the culture and to change the incentive structure in banking," he said.
"It was the incentive structure that got us in to this problem. As the governor of the bank of England said when he came before our committee, it’s a one way bet that heads the bankers win, tails they win and it’s the taxpayer that loses.
"We need to ensure that we have a more mature and long term approach at this to get the banking sector into line with the rest of society.
"The big issues for any environment in the future will be good regulation and if we have good regulations there will be a certainty about it. So whilst it may seem in the very short term that there can be a disadvantage here I think in the medium and longer term if we apply ourselves and get it right then we will prosper.
McFall said he didn’t accept that the rumoured tax on bonuses was not based on a banker "grudge".
"The British taxpayer, as we found out last week to a with the National Audit Office report, is standing behind the banks to a tune of over £850bn - a staggering two thirds of annual GDP total. An enormous amount of money.
"So there is a vested interest here from the taxpayer and what we have to do is look at the issue as too important to fail.
"Are we going to continue on that there is a market here or are we going to ensure that there is a market where companies can fail and they go out of business and those that take the excessive risk are punished for it? At the moment the only ones that get punished for it are the taxpayer and therefore its lopsided - it's unfair and we need to do something about that."
