Former prime minister Gordon Brown has called for a tax on bonuses in the city to help combat the cost of living crisis.
The top Labor politician said the next prime minister should take “urgent” action on spiraling inflation and fuel costs, including reforming the energy price cap and giving government support to those who do not they will be able to pay their heating bills. when they jump again in October.
The aid would have to be paid for with a “watertight” windfall tax on energy companies and a tax on “high levels” of city bonus payments, Brown wrote in the guardian.
Brown claimed that if companies were unable to avoid the tax, the moves could raise up to £15bn, up from the £5bn raised through the 1997 privatized business windfall and the 2009 bank bonus tax.
“Benefits and windfalls must be properly taxed now before the money flees the country,” he wrote, noting that voluntary cuts in energy use, such as those imposed by Germany and France, are they have to agree now “when the weather is good”. if we should avoid rationing later when the weather is bad.”
Last year’s deal boom pushed bonuses in the City banking sector to their highest levels since 2007. However, this year’s packages are shrinking as factors such as inflation, the war in Ukraine and rising interest rates weigh on the outlook for deals. JPMorgan, Barclays and Morgan Stanley are among the banks that have cut pay in the junior ranks.
TO READ Banks won’t challenge UK bonus cap, bosses say
At the corporate level, however, banks received a slight reprieve in October’s Budget as then-Chancellor Rishi Sunak announced that the so-called bank surcharge tax would be cut from 8% to 3% from 1 April 2023, a move that would cost £1 billion for the financial year ending April 2027.
Following the financial crisis, the EU imposed a bonus ceiling of 100% of fixed salary, or 200% if approved by shareholders.
In June, The Independent reported that Sunak was under pressure to relax those rules in the wake of Brexit and that Prime Minister Boris Johnson’s chief of staff, Steve Barclay, was helping to draw up plans to deregulate wages in the sector.
The Department for Business, Energy and Industrial Strategy, said to be the lead department for the plans, told Financial News there have been no meetings between BEIS ministers and other government departments or with external parties about potential reforms to the code of corporate governance and bonuses.
The department did not disclose any cost-benefit or similar analysis carried out by BEIS on the reforms, citing the need to hold discussions behind closed doors as we “continue to use and refine the analysis to inform ongoing policy development”.
To contact the author of this story with comments or news, email Justin Cash
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