Cheaponsale.com Reports Britain’s Chancellor Considers Tax On Bankers’ Bonuses
Britain’s Chancellor of the Exchequer Alistair Darling is considering introducing a tax on bankers’ bonuses, it was revealed Monday.
Darling, who is Britain’s Finance Minister, will publish a pre-budget report on Wednesday.
Darling has told his Treasury officials to make plans to target bankers with a windfall tax. This would stem public unrest at the profits banks are making in the wake of the financial turmoil which saw some of them being bailed out by public money, and further unrest at the high bonuses that some bankers get paid.
It is believed that Darling has two options — first a tax on bankers’ bonuses, and second a tax on banks’ profits.
If either of these measures is carried out it would apply to banks operating in Britain, including foreign banks. The tax could be temporary and could bring in more than 1 billion pounds a year.
Each winter, before the end of the year, the chancellor delivers in person a pre-budget report, which is a financial statement, to Parliament. In it, he reviews circumstances since the last budget, which is normally in March of the same year, and puts forward proposals for the next budget, which will be in March the next year.
This year’s pre-budget report comes at a crucial time, as Britain slowly makes its way out of the most severe recession in living memory and as the political parties ready themselves for the certainty of a general election which will be held no later than May next year.
What the chancellor says he will do, or what he does not do, may well have a big impact on how the ruling Labor Party fares at the next general election.
There is widespread disquiet among voters at the sight of bankers being promised big bonuses by their employers when elsewhere many people have lost their jobs or had no pay rise. The disquiet is further fueled by the fact that the government bailed out several banks with huge injections of cash and credit to save them from collapsing.
One of the banks saved was the Royal Bank of Scotland (RBS). It’s now 80 percent owned by the British government, in effect making Darling the major shareholder.
The RBS hit the news last week when its board of directors threatened that they would resign if they could not pay bonuses to their top-performing investment bankers. They argued that they had to pay the market rate to attract the best performers, and that with good performers they would be able to pay off their debt to the taxpayer quicker.
Lord Peter Mandelson, the British business secretary and a senior member of Prime Minister Gordon Brown’s Cabinet, said that he understood the misgivings of the RBS.
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