UK should extend banker bonus tax, Labour party says

11 January 2011

The UK’s coalition government should extend the 50 per cent tax on banker bonuses, the Labour party leader has said.

Ed Miliband called for the extension of the levy as the coalition negotiates with the heads of British banks over the size of bonus pools for senior executives.

Banks were taxed 50 per cent on all bonuses over £25,000 during 2010, a levy which is believed to have raised £3.5 billion for the authorities.

Now the coalition government is introducing a different tax on bank balance sheets which is predicted to raise £1.25 billion this year and £2.5 billion the year after.

Mr Miliband said: “It is unfair and it is the wrong economic judgment to be cutting taxes for the banks at a time when everybody else is paying more.

“We believe the extension of the bonus tax for another year is not only fairer, but more responsible.”

David Cameron, British prime minister, said in an interview at the weekend that the banks need to do more to show “social responsibility” when deciding on how much they pay in bonuses but added that it would not be fair to turn the sector into a scapegoat for the financial crisis.

By Jim Ottewill

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