I am the first to admit, that I don’t know a heck of a lot about the banking industry, apart from that is where my monthly salary goes etc.
With the advent of Ed Balls becoming Shadow Chancellor, he has again raised the question of taxing banker’s bonuses in the news today.
So can we, should we, intervene and tax the banker’s as Labour insist, or should we take the Government line of discussing with the banks boards regarding bonuses and getting borrowing to small businesses etc going again?
As taxpayers we own shares in two banks, although Labour when in government stressed they would be run as independent companies free from state control, as I remember. It could be said then that we have a say in the bonuses paid to the executives of these banks (depending on the contracts agreed with Labour).
The other banks are not owned by the Government and are therefore, surely, the same rules apply as to any other service providing business in this Country, or even the World.
So although I can see Labour’s point and those of everyone who are disgusted at the size of the awards given (again we don’t know the details of their contracts) and I am in no way defending the banks and bankers in this, I have to ask the following questions:
- Should the banks, as an industry be singled out, or should any tax levied be applied to all plc companies, or even, as has been muted, footballers?
- If we push the banks, financial institutions too far won’t they just take their business/facilities somewhere else, where they can do as they wish?
- Aren’t a lot of the banks multi-national, as we were told during the banking crisis and therefore it’s not just our problem anyway?
- If the banks did actually leave these shores, how would it affect us economically, as a Country and individually?
I can understand the frustrations with this but with the decline in our manufacturing industry etc. can we really afford to lose our finance industry too?
It seems we depend on them, more than they depend on us, which to say the least is a bit of a stalemate. We would all like to see the banks apply common sense, but at what price?
I apologise for any inaccuracies, but as stated above I am looking at this, as usual, from the outside.
Rob's View (from the sidelines) 
I think the issue here is that bankers bonuses are the easy political target but even if they were cut to zero we would be little better off than we were before in terms of avoiding problems arising in the future. Arguably we get a better tax take with higher bonus payments since the alternative is the same money appearing as company profits which are taxed at a lower rate.
As far as I understand the real problem is that banks as currently configured can’t be allowed to fail because pretty much all of us have money in the High Street side of the major banks. Failure (but also enormous profit) comes from the investment side of the banks which have done well recently because share prices have risen. I’m slightly suspicious of this since I imagine I am exposed to investment bank failure via my private pensions. So what we should be really looking out for is how reform happens in terms of separating High Street and investment banking.
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There is already is tax on bankers bonuses. 50% income tax, 12.8% employers NI 1% employee ni
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