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Bank bonus tax is another good reason to quit UK
'Who the hell wants to stay in London?' is the response to Darling's super-tax
Whatever the political calculation behind Alistair Darling's 50 per cent super-tax on bank's bonus payouts, bankers are in no doubt who will ultimately be the winner: foreign financial centres.
Though Darling presented the tax as an incentive for banks to rebuild their capital bases rather than a punishment for massive bonuses, bankers are already said to be clamouring to leave the UK, either heading for New York or to Geneva where much of the London hedge fund industry is already relocating to avoid additional regulation.
One investment banking chief told the Financial Times that the "contract between government and business is broken" and warned that up to 40 per cent of the City's activities were "mobile" and would move overseas to more welcoming jurisdictions.
"I can't tell you how many people have called me from London asking to move," a senior Wall Street banker told the FT last night. "The question all the banks have now is: who the hell wants to be in the UK? Some businesses will definitely leave."
One unresolved question is how much in tax receipts will Darling's gamble actually raise. The Treasury estimates the move will raise £550m and affect 20,000 bankers. But the Treasury could raise up to £4bn if – as seems likely – banks press ahead with bonus payouts anyway.
The sour mood of the banking industry, already hit by the new 50 per cent top rate of tax and the Labour governments' pursuit of the non-domiciled wealthy, could well trigger the flight of money and financial talent.
While bankers acknowledge the industry could have been quicker to recognise the prevailing public and political mood and moved to act more soberly over bonuses, many say Darling's remedy will end up causing more problems than it solves.
Rick Waugh, president of Scotiabank, said: "Using tax policy is a very blunt instrument. Be careful of unintended consequences." Richard Lambert, director of the Confederation of British Industry, said Darling's "jobs tax" was a "serious mistake."
Still, if it was a political budget Darling was seeking to deliver, he may have succeeded better than he could know.
Last night, French President Nicolas Sarkozy, whose government has introduced a code of conduct to police banker remuneration, joined Gordon Brown in endorsing the idea of a one-off bonus tax in today's Wall Street Journal.
"We agree that a one-off tax in relation to bonuses should be considered a priority due to the fact that bonuses for 2009 have arisen partly because of government support for the banking system," the article says.
The two leaders said they were preparing further propositions which they say will "encapsulate both the responsibilities of the banking system and the risk they pose to the economy as a whole". But it may yet turn out that our political leaders are at least as dangerous as the bankers they wish to curb. ·
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Neil, come to Canada. We've lost almost as many soldiers in Afghanistan as the UK has with twice the population. Thats friendship !
I can't imagine why anyone stays in the UK. Shoddy service; abysmal transport; chronically overpriced transport (67 quid for a day return to Cambridgeshire, even if bought on thetrainline.com); overpriced everything else; can't buy a drink after 11pm; medieval Church laws stopping you buying things on Sundays; absurd taxes that go to propping-up bankrupt banks, duck islands or yankee wars; chavs and jobsworths at every turn; gameshow mindrot on every tv-channel; and fat drunken Nazis holding demos up and down the land each weekend. No wonder America is Britain's only friend . Brgds from Moscow to one and all.
I agree with Rick Waugh, president of Scotiabank, that "using tax policy is a very blunt instrument". He should just be grateful that we're resisting the significant temptation to use much sharper instruments on bankers. I do like the threat to move to Switzerland though. Very funny.
"I can't tell you how many people have called me from London asking to move," a senior Wall Street banker told the FT last night.
OK! But he/she did not say how many people he/she offered a job.
Washington Post last week had an article on Neel Kashkari, Obamas $700 billion TARP czar.
The article is an eye-opener. It shows how a patsy (Neel Kashkari) can be set up for a fall by a real powerful man (Henry Paulson of Goldman Sachs) who did not even know patsy's name. But also how a real human being might be re-born once outside the amorphous, unreal world of banking and high finance.
Kashkari resigned and is now building a shed somewhere in Nevada County, California.
The bankers who feel that the "contract between government and business is broken" may want to go Kashkari's way and start doing something soild and real for once.
As the article says Kashkar now sleeps well at night, the bankers with lot less money may be able to sleep well at night. Otherwise, they could read the history of the near by Tower of London and remind themselves that history has a tendency to repeat itself as banks has a tendency to periodically go bust.
Yes, some bankers are venal & greedy...as are most of us, given the opportunity. What you are seeing is the result of decades of 'progress'by most gumments since WW2..moral degeneration...Welfare fraud...unrestricted immigration of the worst of alien elements...the destruction of our agricultural & fishing industries...the (ANNOUNCED) sale of our gold reserves...thieving & mendacious MPs & Lords (Not one of whom has yet seen the inside of a courtroom)...untold billions paid into the ever outstretched hand of Africa...and much more...and finally the surrender, without the assent of the British people, of what sovereignty we had left to that unaccountable unelected & faceless body of bureaucrats, the EU....which now, with the help of dishonest science, plans to bring us back to the Dark Ages. Did all that worry you unduly? Bankers' bonuses! Ha!
How on earth do all these people saying that we should build a "real" i.e. manufacturing based economy think that we are going to do this ?
We are no longer competitive as a manufacturing centre due to ludicrously high costs driven by numerous aspects of intrusive government. Amongst these are an extremely expensive social security system, a ludicrously complicated and costly business environment which imposes significant barriers to start-ups, and a punitive tax regime which discourages wealth accumulation anyway.
Add on to that a largely defunct education system which is much better at turning out graduates in uselesss subjects such as Film Studies rather than in Engineering and a feral media that demonises the business community generally, and it is difficult to see how we are going to magically "rebalance the economy".
The future in the real economy belongs to the Asian nations who have consistently invested in building skills and capacilty over the last 20-30 years. people like Jess D and Deloki need to wake up and stop living in La-La land !
Maybe we should treat this as an opportunity to rebalance the economy and reduce the Treasury's addiction-like dependence on so-called 'financial services' in favour of 'real' and useful products. Time to stop the blackmail.
Hear hear, good riddance. They don't create wealth, they steal it from those who do. They are parasites who have conned too many for too long that they're essential to the financial health of a country, what nonsense. If any leave, they should be made to leave with nothing, stripped of all their ill-gotten gains.
They have landed the country with massive debts through their greed and manipulation of the financial system and now already plan to continue with their self enrichment at the expense of the taxpayer. Maybe it is time to start building a "real" economy. I suppose they will be taking the debts they incurred with them when they move.
The bankers do nothing particularly clever. Anyone could be taught all the tricks of the trade, provided they have no conscience and don't blush while they do it. Believe me, I've been there. The fact that they do things within the written law can't hide the fact that most so called 'deals' are legalized theft. If the tricks were widely known, there would be mass demand for legal curbs. Don't forget that not so many years ago cornering in the Stock Market was perfectly legal. Now you can go to prison for it and justly so. If there is a flight of so called 'talent', the departure of the thieves might give us a chance to have a transparent and honest banking system, a very marketable thing.
Well they would say that wouldn't they.
It surprises nobody that investment bankers / hedge-fund managers and all the other gamblers and leeches are crying 'foul play' & threatening to move their physical locations to the States & Switzerland. This is what becomes of a country that for the past two decades or more has become dependent on the invisible and flakey banking system, with its emphasis on greed as a motivational credo. Good riddance to them all.