It seems only natural for the government to step in and control the banking greed that is spiraling out of control. The banking industry in Britain has received over £850-billion in taxpayer bailout funds in a twelve-month period. Meanwhile, unemployment is still high. And just as the banks were gearing up to pay employees over £7 billion in bonuses, the government imposed a “super tax” that would cripple big gains offered by bonuses.
The super tax imposed only affects banks who have received bailout funds and are planning on issuing out bonuses. Bonuses would be taxed by 50% whilst the remaining would be subject to an additional income tax in the highest applicable tax bracket. For banks that attempt to delay bonuses will be subject to an even bigger fine. It’s sure to have most banks re-evaluating whether to give bonuses at all.
The super tax may be loved by the public, but it has bankers so enraged that they’re planning to delay bonuses. The Globe and Mail reports that senior bankers may hold off on bonuses until a conservative group takes over in government which could happen by next year. Otherwise, some banks may consider leaving London’s jurisdiction to escape the super tax.
This situation does create a predicament for London. For a city facing high debts, they may not reap much from this tax if banks refuse to participate. High level corporate crooks have their way of defying regulation over their spending practices. There’s one thing the wealthy elite and high-grossing corporations won’t lie down and take and that is high taxation. Some speculate that if banks do indeed pack up and leave the city, their largest earning financial sector will take a hit.
Despite the controversy over the super tax, it does deliver a warning to banks that they aren’t invisible to scrutiny. With that in mind, more countries need to follow suit to keep banks from simply relocating. In the meantime, banking employees can’t count on getting their big fat million pound bonuses for the holidays.
*Image courtesy of the Guardian.
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