Liberal Democrats call for tougher bonus tax in the UK

6 October 2010

The Liberal Democrats have called for a tougher bonus tax to be introduced for banks operating in the UK.

Lord Oakeshott, a Treasury spokesman for the junior party in the coalition government, said that it is unacceptable that financial institutions in Britain are failing to lend to small businesses while awarding their top employees "ever bigger bonuses".

He said that members of the current Conservative-Liberal Democrat government must do more to tackle the issue than their predecessors from the Labour party.

"The answer must be to take immediate action on bonuses and the obvious way is to have a much tougher bonus tax than Labour's feeble feather-duster and much stricter net lending targets to small and medium-sized businesses while we wait for the banking commission to recommend more radical reform," Lord Oakeshott stated.

Last year's one-off tax on banking bonuses introduced by Labour brought in more than £3 billion ($4.76 billion) for the Treasury.

Lord Oakeshott went on to praise Royal Bank of Scotland chairman Sir Philip Hampton for recently admitting that regulation may be the only way to control banking bonuses as financial institutions cannot be trusted to make cutbacks themselves.

"Responsible bankers like Sir Philip Hampton openly admit the bonus merry-go-round is spinning far too fast but no one will risk being the first to get off," the Liberal Democrat official stated.

A recent report from the Centre for Economics and Business Research has estimated that banks in the UK are likely to pay out bonuses in the region of £7 billion this year.

But Benjamin Williamson, one of the co-authors of the study, told Bloomberg earlier this week that the majority of the money should be recouped by the state.

He said that an estimated £4.1 billion of this figure will end up in the hands of the Treasury.

By Tony Aynsley

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