Great Britain Slaps 50% Tax on Bank Bonuses

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Wednesday December 09, 2009 · 12:09 PM PST

2009/12/09 · 12:09

Her Majesty's Government cracked down hard on bankers:

In a widely expected move, Britain’s chancellor of the Exchequer, Alistair Darling, announced Wednesday a one-time tax on bank bonuses, The New York Times’s Landon Thomas Jr. reported.

In an address before parliament, Mr. Darling also outlined steps to tackle Britain’s soaring budget deficit, which at 13 percent of gross domestic product is among Europe’s highest. But it will be his proposed levy — which will immediately become law and will affect banks’ 2009 profits — that will draw the most attention.

The tax represents the most direct attack on bank bonuses anywhere in the world. All banks in Britain — including the London-based subsidiaries of foreign banks — will be affected, whether they took government bailout funds or not.

Alistair Darling, the U.K.'s Chancellor of the Exchequer -- sort of like a Treasury Secretary, but with more pluck -- announced today that he will impose an immediate, one-time 50-percent tax on bonuses of more than 25,000 pounds (about $40,800). That's on top of regular income taxes.

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David Cameron, Conservative leader, is supportive and wanted a tax of 60%:

'But these are extraordinary times. It is not acceptable that taxpayer money goes into the banks and out in bonuses.'

Mr Cameron said he wanted a levy of at least 60 per cent on bank bonuses above a certain level.

He added: 'It is not necessarily true that all windfall taxes will lead to damage.'

Maybe he was considering this:

The bonus tax, however, is not without precedent. In 1981, Margaret Thatcher imposed a onetime tax on bankers, who were making outsize profits thanks to the high interests rates that prevailed at the time.

THATCHERITE SOCIALISM!!!

And from the Democrats in Washington?

h/t to bobswern for his earlier diary on this topic.

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