British Treasury chief announces one-time tax on bankers’ bonuses

LONDON — The British government announced a one-time tax on bankers’ bonuses as it laid out plans for the country’s ravaged economy ahead of a looming general election.

LONDON — The British government announced a one-time tax on bankers’ bonuses as it laid out plans for the country’s ravaged economy ahead of a looming general election.

Treasury chief Alistair Darling said Wednesday it was payback time for banks that lost a combined 80 billion pounds (C$137 billion) last year and needed taxpayer-funded bailouts to stabilize the system.

The 50 per cent tax on bonuses above 25,000 pounds (C$42,790) could prove popular with the general public, with Britain the only major economy still in recession and Prime Minister Gordon Brown’s Labour party trailing the opposition Conservatives in opinion polls.

An election that must be called within six months.

“There are some banks who still believe their priority is to pay substantial bonuses to some already high-paid staff,” Darling told lawmakers as he delivered the government’s pre-budget report in Parliament.

“Their priority should be to rebuild their financial strength and to increase their lending,” he added. “If they insist on paying substantial rewards, I am determined to claw money back for the taxpayer.”

The tax will be imposed on the pool of bonuses paid by a bank, rather than individual payments, and it will be paid by the bank — not the recipient of the bonus.

Darling said that measures to keep people from avoiding the bonus tax would be introduced “with immediate effect.”

The move could cost Canadian banks, namely Royal Bank (TSX:RY), which has a significant London operation. A spokeswoman for Royal said the bank is still examining the government’s decision and declined to comment.

Canadian Bankers Association spokeswoman Maura Drew-Lytle noted that banks in Canada have largely avoided the difficulties that banks around the world.

“The whole discussion of reforms to bank compensation practices originated in an international context due to some practices in other countries which rewarded excessive risk taking,” she said.

The Labour government is under pressure to reduce its spiralling debt after Britain was hit hard by the global credit crisis.

Britain remains in recession, with Canada, the United States, Germany and Japan all already recording growth.

Darling on Wednesday downgraded his forecast for the economy this year, saying it will shrink by 4.75 per cent. That is significantly worse that the 3.25-2.75 per cent contraction he predicted at the time of the full annual budget in April.

He retained his forecast of gross domestic product growth of 1-1.5 per cent growth for next year, but also raised his 2009-2010 borrowing forecast slightly to 178 billion pounds, from 175 billion pounds previously.

Just Posted

PHOTOS: Buccaneers battle Wolfpack in AFL semifinal

The Central Alberta Buccaneers battled the Calgary Wolfpack in the Alberta Football… Continue reading

Raising awareness for Bikers Against Child Abuse

Second annual Raise A Ruckus Against Child Abuse was held at the Red Deer Radisson Hotel Saturday

Central Alberta Yogathon cancelled Saturday

Due to air quality concerns the fourth annual event will take place Sept. 15

City Hall Park construction begins next week

Construction to update Red Deer’s City Hall Park is set to begin… Continue reading

PHOTOS: Jazz at the Lake begins

The 16 annual event began Friday and runs until Sunday in Sylvan Lake

WATCH: Medicine River Wildlife Centre opens new playground

The grand opening of the playground was Saturday morning

Thousands to attend funeral service for officers killed in Fredericton shooting

FREDERICTON — Hundreds of people have lined the route of a funeral… Continue reading

Calgary police officer seriously injured

CALGARY — The Calgary Police Service says one of its officers was… Continue reading

Canadians react to death of former UN secretary-general Kofi Annan at age 80

MONTREAL — Canadian politicians are adding their voices to the international reaction… Continue reading

‘Four of a dozen kids will not make it:’ Tina Fontaine’s family healing together

WINNIPEG — Melissa Stevenson was just starting her career 18 years ago… Continue reading

No winning ticket for Friday night’s $16 million Lotto Max jackpot

TORONTO — No winning ticket was sold for the $16 million jackpot… Continue reading

Hundreds of neo-Nazis march in Berlin, protected by police

BERLIN — Hundreds of neo-Nazis waving flags with the colours of the… Continue reading

Romanian trucker is Genoa bridge’s 43rd victim

GENOA, Italy — The Latest on the Italy bridge collapse (all times… Continue reading

1 dead, 6 injured after building collapse in Nigeria capital

ABUJA, Nigeria — An emergency response chief says one person is dead… Continue reading

Most Read


Five-day delivery plus unlimited digital access for $185 for 260 issues (must live in delivery area to qualify) Unlimited Digital Access 99 cents for the first four weeks and then only $15 per month Five-day delivery plus unlimited digital access for $15 a month