ianstone
09-03-2010, 03:18 PM
Crafty banks still managed to pay huge bonuses despite my supertax, admits former chancellor Alistair Darling
By Daniel Martin (http://www.dailymail.co.uk/home/search.html?s=y&authornamef=Daniel+Martin)
Last updated at 9:50 AM on 3rd September 2010
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http://i.dailymail.co.uk/i/pix/2010/09/02/article-1308407-098467E1000005DC-812_233x423.jpg Alistair Darling admits banks have been able to get around his 'supertax'
Bankers sabotaged a tax on massive bonuses by using their financial expertise to keep hold of their wealth, Alistair Darling has admitted.
The Labour former chancellor said his supertax on bank bonuses simply did not work because of the ‘imaginative’ tactics used by the people it was targeting.
The 50 per cent tax on bonuses over £25,000 was deeply unpopular in the City of London.
Last year, 26 London-based banks and financial institutions had to comply with a new FSA pay code, and had to pay a one-off 50 per cent bonus tax which netted the Treasury £2billion.
But his disclosure that bankers simply found their way around it will do nothing to dampen public anger at the conduct of the industry.
Last week it was disclosed that semi-nationalised Lloyds TSB has been deluged with hundreds of thousands of complaints by customers about their treatment - but upheld just one in ten.
And on Wednesday, Credit Suisse made a surprise decision to pay bonuses to 400 of its London bankers to stop them defecting to rival institutions.
It is making the multi-million-pound payout on top of the usual end-of-year bonuses, and has denied that the September bonus round was designed to avoid paying the extra tax, which expired in April.
The former chancellor imposed the levy last year following an unprecedented outcry over bank pay in the wake of the credit crunch.
But he told a conference this week that it had failed to change the industry’s behaviour over pay - because ‘imaginative’ financiers had found a way around it.
Banks had warned of a brain drain to other global financial centres.
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Labour plunged into civil war by Blair's literary attack on Brown (http://www.dailymail.co.uk/news/article-1308231/Tony-Blair-memoir-attacks-Brown-plunge-Labour-new-civil-war.html)
Mr Darling said he thought it was unlikely the tax would be reinstated by the Coalition Government, because it had failed.
He said: ‘It will be a one-off thing because, frankly, the very people you are after here are very good at getting out of these things and... will find all sorts of imaginative ways of avoiding it in future.
'But what I wanted to do was send a message to them that we all live in the same world together.’
He was speaking at a financial services conference sponsored by Nomura, a Japanese investment bank.
http://i.dailymail.co.uk/i/pix/2010/09/02/article-1308407-0B02FF4A000005DC-223_468x286.jpg The former chancellor admitted his supertax on City of London failed to change the behaviour of banks
Earlier this year it emerged that some institutions were simply ignoring the bonus tax.
Goldman Sachs was accused of living in an ‘Alice in Wonderland world’ when it awarded its bankers a 57 per cent jump in their pay packages.
The average employee at the investment back scooped £308,000 in salary, bonuses and other benefits in 2009 - £112,000 more than the previous year.
In fact, the majority of bankers saw an increase in payouts, despite the bonus tax.
A survey in February showed that almost 60 per cent had received an increase.
For these lucky ones, payouts had doubled on average. On top of this, two thirds of bankers received a basic salary increase in the past year, with the average being 26 per cent.
Mr Darling warned the banks that they will face further reforms they will not like, unless they take more notice of the public’s concerns.
He said: ‘You just need to be sensitive. Otherwise I fear that it holds the risk that someone is going to do something which, in the cold light of day, a few years down the line, maybe wasn’t such a good idea.’
The Treasury is now drawing up plans for a financial activity tax to compensate taxpayers for vast sums lost in the crisis.
Read more: http://www.dailymail.co.uk/news/article-1308407/Alistair-Darling-Banks-managed-pay-huge-bonuses-despite-supertax.html#ixzz0yUn4V6uZ
By Daniel Martin (http://www.dailymail.co.uk/home/search.html?s=y&authornamef=Daniel+Martin)
Last updated at 9:50 AM on 3rd September 2010
Comments (71) (http://www.dailymail.co.uk/news/article-1308407/Alistair-Darling-Banks-managed-pay-huge-bonuses-despite-supertax.html#comments)
Add to My Stories (http://www.dailymail.co.uk/news/article-1308407/Alistair-Darling-Banks-managed-pay-huge-bonuses-despite-supertax.html)
http://i.dailymail.co.uk/i/pix/2010/09/02/article-1308407-098467E1000005DC-812_233x423.jpg Alistair Darling admits banks have been able to get around his 'supertax'
Bankers sabotaged a tax on massive bonuses by using their financial expertise to keep hold of their wealth, Alistair Darling has admitted.
The Labour former chancellor said his supertax on bank bonuses simply did not work because of the ‘imaginative’ tactics used by the people it was targeting.
The 50 per cent tax on bonuses over £25,000 was deeply unpopular in the City of London.
Last year, 26 London-based banks and financial institutions had to comply with a new FSA pay code, and had to pay a one-off 50 per cent bonus tax which netted the Treasury £2billion.
But his disclosure that bankers simply found their way around it will do nothing to dampen public anger at the conduct of the industry.
Last week it was disclosed that semi-nationalised Lloyds TSB has been deluged with hundreds of thousands of complaints by customers about their treatment - but upheld just one in ten.
And on Wednesday, Credit Suisse made a surprise decision to pay bonuses to 400 of its London bankers to stop them defecting to rival institutions.
It is making the multi-million-pound payout on top of the usual end-of-year bonuses, and has denied that the September bonus round was designed to avoid paying the extra tax, which expired in April.
The former chancellor imposed the levy last year following an unprecedented outcry over bank pay in the wake of the credit crunch.
But he told a conference this week that it had failed to change the industry’s behaviour over pay - because ‘imaginative’ financiers had found a way around it.
Banks had warned of a brain drain to other global financial centres.
More...
Blair's book: The love affair that soured... how mistrust and betrayal tore former PM and his Chancellor apart (http://www.dailymail.co.uk/news/article-1307904/Tony-Blairs-memoirs-How-mistrust-betrayal-tore-Blair-Brown-apart.html)
Labour plunged into civil war by Blair's literary attack on Brown (http://www.dailymail.co.uk/news/article-1308231/Tony-Blair-memoir-attacks-Brown-plunge-Labour-new-civil-war.html)
Mr Darling said he thought it was unlikely the tax would be reinstated by the Coalition Government, because it had failed.
He said: ‘It will be a one-off thing because, frankly, the very people you are after here are very good at getting out of these things and... will find all sorts of imaginative ways of avoiding it in future.
'But what I wanted to do was send a message to them that we all live in the same world together.’
He was speaking at a financial services conference sponsored by Nomura, a Japanese investment bank.
http://i.dailymail.co.uk/i/pix/2010/09/02/article-1308407-0B02FF4A000005DC-223_468x286.jpg The former chancellor admitted his supertax on City of London failed to change the behaviour of banks
Earlier this year it emerged that some institutions were simply ignoring the bonus tax.
Goldman Sachs was accused of living in an ‘Alice in Wonderland world’ when it awarded its bankers a 57 per cent jump in their pay packages.
The average employee at the investment back scooped £308,000 in salary, bonuses and other benefits in 2009 - £112,000 more than the previous year.
In fact, the majority of bankers saw an increase in payouts, despite the bonus tax.
A survey in February showed that almost 60 per cent had received an increase.
For these lucky ones, payouts had doubled on average. On top of this, two thirds of bankers received a basic salary increase in the past year, with the average being 26 per cent.
Mr Darling warned the banks that they will face further reforms they will not like, unless they take more notice of the public’s concerns.
He said: ‘You just need to be sensitive. Otherwise I fear that it holds the risk that someone is going to do something which, in the cold light of day, a few years down the line, maybe wasn’t such a good idea.’
The Treasury is now drawing up plans for a financial activity tax to compensate taxpayers for vast sums lost in the crisis.
Read more: http://www.dailymail.co.uk/news/article-1308407/Alistair-Darling-Banks-managed-pay-huge-bonuses-despite-supertax.html#ixzz0yUn4V6uZ