For the tax
Brendan Barber, TUC General Secretary
Top bankers are once again confusing their telephone numbers with what they should be paid. Huge bonuses are the most obvious symptom of a deeply flawed finance system. Their excesses nearly brought down the global economy, and without massive help from taxpayers many would now be on the dole. The problem is that the finance sector started serving itself, rather than the interests of the rest of the economy. The real answer is fundamental reform but in the meantime a windfall tax on bankers' bonuses is absolutely right – but only as a start of more radical change.
Stephen Alambritis, Spokesman for the Federation of Small Businesses
We all need to be seen to be making sacrifices and so some modesty on behalf of the banks would be welcomed. Small businesses have also been feeling the strain, but many have had to plough income back into the company, knowing that, unlike the banks, they cannot go running to the Chancellor for a bailout. We would still support bonuses for branch staff that keep their branches open for longer, for example. However, we dohave a concern about the proposed bonuses for those at the very top. In most cases they are getting bonuses for what they should be doing anyway.
Lisa Harker, Co-director of think-tank IPPR
While this tax is clearly not itself going to address the economic crisis brought about by the banking sector, it is right that those who played a part in it and benefited from the bailoutface a financial penalty. Given the bankers' shameless refusal to show any voluntary restraint, the government has no choice. The naked blackmail of city fat-cats who claim that they will desert the UK if they don't get their mega-bonuses has to be faced down. A financial sector which holds its people to ransom will eventually destroy our economy.
Against the tax
Angela Knight, Chief executive of the British Bankers' Association
It is unprecedented that the Chancellor should pick out one sector of the population for an additional and significant tax. It is also odd that this should be raised at this point, especially after the majority of institutions have agreed to the new regulations on compensation for employees: in the bulk of cases, bonuses are to be delayed for two or three years, and in any event, are to be paid in shares. So is there going to be a tax that could be delayed for three years until the bonus is paid, and only then if the person sells the shares? This proposal is populist, political and penal.
Chris Roebuck, Professor at Cass Business School, London
In Zurich, even with normal UK tax, let alone supertax, bankers would pay less than 30 per cent tax compared with 50 per cent in the UK. Just 45 minutes down the road in Zug they would pay only about 15 per cent. It takes less time to get to Zurich from the City than it does to go to Manchester. The reality is that even for a banker getting only a £100K bonus the tax saving would be£20,000 per year in Zurich and £35,000 in Zug – making it almost worth it. There are many peoplewho fall into this category and the Swiss Government has been approaching some top players. RBS has already lost an estimated 1000 bankers to competitors and this is likely to increase.
Simon Walker, Executive, British Private Equity and Venture Capital Association
There's a case for the view that the way banks paid unrestrained bonuses on unrealised gains fuelled risk-taking. But this isn't true everywhere in financial services. In private equity,for example, where investors buy companies rather than just trading shares, there are no phantom shares, or conditional options devised by remuneration consultants. And no generous redundancy pay-off if your investments fail. There are rewards for success in private equity but it is paid out when actual cash is returned to investors. That could be 10 years later, and only if a set threshold has been met. That's long term.Reuse content