Stimulus costs become apparent


The chancellor of the Exchequer, Alistair Darling, announced a one-time tax on bank bonuses Wednesday, part of the government’s effort to shore up the still-weak British economy.

Banks will be charged a 50 percent tax on 2009 bonuses of more than £25,000, or $40,800. It 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 by the recipient of the bonus. It will take effect immediately and will affect banks’ 2009 profits.

The levy 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 funds or not.

“Last year banks made £80 billion in losses,” Mr. Darling said during a pre-budget speech to Parliament that was frequently interrupted by howls of protest from members of the opposition Conservative Party. “But if they insist on paying substantial rewards, I am determined to claw money back for the taxpayer.”

The tax measure was the highlight of a push by Mr. Darling to persuade voters in Britain, as well as investors at home and abroad, that the Labour Party has the ability to tackle Britain’s budget deficit, which at 13 percent of gross domestic product is among the highest in Europe.

In his speech, he said his government aimed to more than halve the deficit by 2013 through tax increases and sharp spending cuts.

His strong words on cutting the deficit come against a backdrop of increasing investor unease about the ability of governments everywhere to address deeply imbedded debt problems.

In Greece, where a new Socialist government is struggling to prove it is serious about reducing a deficit that in proportion to its economy is similar to Britain’s, the cost of insuring Greece’s sovereign debt continued its recent rise Wednesday.

The same was true in Dubai, where there is an increasing fear that other government-controlled entities beyond the troubled conglomerate Dubai World will have to restructure their debts.

via Britain to Levy a One-Time Tax on Banker Bonuses – NYTimes.com.

Advertisements

About zyakaira

Investment Banker, 40s, Bangalore This Biopic and this web recreates how one point of view, one person can impact a tremendous economic engine that the world thrives and mis-thrives on. This one has the knowledge and the civil sense , the art of conversation and some good writing to mentor others as powerful and help global managers develop and fine tune their approach on US markets, China, India and the world. Read on here, and let me know what you need. It can be a race for TRPs, a race for new markets and a race to do what is right. I have the pulse of the crisis, the recovery and the market direction and can help you build and refine your strategy as i have helped thousands of managers and multiple global corporations. Of course, it’s more fun if you talk to me. I am in favor of leading this moving of the economic crisis and will partner with you in a soft and subtle way, just the way we both ride to the top. But you can write with us, opine and just reply with aplomb and shine on Twitter , 4 square , Facebook and any other social “choupal” of choice via zyaadakairaada Profile & Portfolio - SocialPicks Different flavours at: http://benchilibowl.wordpress.com http://zyaada.mp

Posted on December 10, 2009, in Bank Stocks, Financial Markets, TARP, US and tagged , , , , , , . Bookmark the permalink. Leave a comment.

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: