Alistair Darling urged bankers on Wednesday to demonstrate they “live on the same planet as the rest of us” by curbing bonuses.
Defending his move to levy a 50 per cent bonus supertax, the chancellor said his intent was to change banks’ behaviour rather than raise revenue.
“I say to the bankers …if you want to get off the front pages, for goodness’ sake show some of the restraint the public want you to,” Mr Darling told the Commons Treasury committee.
The broadside came as France outlined its plan to follow Britain’s one-off tax, although Paris has adopted a narrower definition of the bankers covered by the levy on bonuses above €27,500 (£24,500).
The French finance ministry says 2,000-3,000 traders whose activities could expose their bank to risk will be covered; Mr Darling’s scheme is expected to cover 20,000-30,000 staff involved in the “activities of banking”.
Mr Darling’s estimate that the tax would raise £550m now looks like an underestimate: many banks have told Treasury officials they will reward their traders regardless. Bankers’ representatives held “constructive” talks with the Treasury and Revenue and Customs over the operation of the tax, which will hit bonuses over £25,000.
The Treasury is reviewing examples of where the bonus tax might operate unfairly or unintentionally on a case-by-case basis, including how the levy will apply to international bank staff who spend only a few weeks or months in the UK. It has already decided to exclude stock brokers and asset managers from the tax, which it had unintentionally captured in the proposals.
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