Bank Bonus Tax

[Cambon]

They are tax payers who will be hit by the tax, but there are specific tax payers - those that work in banks.

Now I haven't read much into the background of this yet. Tax bonuses of the majority of staff is wrong because such people don't have any control or power within the company. However, it would appear to me to be a different matter for those far higher up in the company who do make such grand strategic decisions and receive massive salaries and outrageous bonuses, sometimes even when their decisions have resulted in calamity.

 

But it is all a bit of a silly exercise. From what I understand, you can't make the banks 'pay' for the damage they have wrought by the staff or the bank pay more. The costs will be offloaded onto the public in the end.

 

If you receive a bonus you pay tax on it. That has not changed. Yesterday's decision was an additional tax on the banks, that they have to pay - 50% of any bonus over £25k. Excluded are the massive, pre-arranged bonuses, or bonuses declared prior to yesterday. The decisions on bank bonuses were already made prior to yesterday, in general, as bank's payrolls will be paid early for Christmas.

 

The whole report yesterday was just a big PR exercise. He did nothing about repaying debt, etc. Why should he? He knows they don't have a cat in hell's chance of getting in next May, so why put the country under "Labour Pain"? Let the conservatives take the wrap for the pain. Just remember who caused it, and I don't mean the banks!!!

[manshimajin]

Yesterday's decision was an additional tax on the banks, that they have to pay - 50% of any bonus over £25k. Excluded are the massive, pre-arranged bonuses, or bonuses declared prior to yesterday. The decisions on bank bonuses were already made prior to yesterday, in general, as bank's payrolls will be paid early for Christmas.

According to today's FT the tax will only apply up to 5 April on bonuses 'promised' before that date. So easy enough to defer any promises until after 5 April (except perhaps on those crazy 'guaranteed' bonuses).

 

This ultimately does not address the core issue of the overpayment of senior bankers for the jobs they do. Should UK follow Germany's legislative example and limit annual payments to senior bankers to a maximum of €500,000 (£450,000)? Perhaps this would go some way to putting the breaks on.

 

If what bank Boards and financial 'experts' are saying every time remuneration controls have been introduced to try and haul back on greed we shall no doubt be hearing about the flood of German bankers leaving the country to join the queue forming as bankers flee the UK to avoid the 50% tax rate and their US cousins exit New York. Not to mention the French bankers who must be getting concerned about Sarkozy's latest pronouncements.

 

IMO there is no time like the present to stop this silly system that has been feeding on itself in an ever increasing vicious spiral of personal greed and risk taking.

[La_Dolce_Vita]

If you receive a bonus you pay tax on it. That has not changed. Yesterday's decision was an additional tax on the banks, that they have to pay - 50% of any bonus over £25k. Excluded are the massive, pre-arranged bonuses, or bonuses declared prior to yesterday. The decisions on bank bonuses were already made prior to yesterday, in general, as bank's payrolls will be paid early for Christmas

Exluded are the massive bonuses. Well taxing any future bonuses is better than taxing none from the perspective that such taxing will lead to a recoup of monies back into the 'public purse'.

 

The whole report yesterday was just a big PR exercise. He did nothing about repaying debt, etc. Why should he? He knows they don't have a cat in hell's chance of getting in next May, so why put the country under "Labour Pain"? Let the conservatives take the wrap for the pain. Just remember who caused it, and I don't mean the banks!!!

You mean the public debt?

 

I am a little unsure as to exactly what are motivatory factors are behind the bonus tax, in that I don't know whether there is any real desire to recoup some money from the bank or punish, rather than simply pandering to the public misunderstandings of the financial crisis where there is this dogged obsession with salaries and bonuses (admittedly fuelled by the media). It is true, there are people in the banks paid obscene amounts in salaries and bonuses. AND it takes the piss that they continue to do so well when the banks and other financial instances have caused the crises and the public has been forced to prevent their demise.

 

But capping salaries and hitting bonuses isn't going to solve the problem. It might offer some satisfaction to the public that there might possibly be some capping. But people seem to be under the idea that these measures might prevent a crisis happening in the future or that the reasons for crisis seem somehow to be due to people being paid too much. The financial markets cannot continue in the liberalised environment that previously existed, and nor should they. In the current economic system the best that can be achieved is ever stricter regulation and even more State involvement in this dangerous industry.

 

And again, as I say, it is disgusting that such people receive such wages and salaries, but it is just the banks that pay such amounts and it isn't ALL the banks fault.

 

Are you still hinting at the fact that you believe government is the reason for the financial crisis? And whether the conservatives are in government or Labour, not much is going to change.

 

IMO there is no time like the present to stop this silly system that has been feeding on itself in an ever increasing vicious spiral of personal greed and risk taking.

We do, however, live in an economic system where profitmaking and greed are the motivators for productivity. I am not implying that the finance industries operations can be called productive, but these businesses operate for the purposes of making profits. And risk taking is the nature of the beast, more so than any other industry. What the problem has been is that these businesses long ago got their way in arguing for being allowing to 'do their thing' without the most stringent regulation whilst arguing from the myths of pure markets systems.

[Bananaman]

Im sure thay will find a way round it thay allways do

That's why I pay my accountant less than what he saves me though.

 

I hope

[bellyup]

It's far too early to be raising VAT to 20%, the economy isn't ready for that.

You reckon? We are already years behind the rest of Europe on VAT. Vat should be put up to 20% (minimum) ASAP, and the interest rate should be put up to be at lease on par with the Euro, preferably slightly higher to attract deposits and investments from overseas. The sooner it is done the better it will be for the economy in the long term. In the short term it will hurt whether they did that or not.

 

Deposits from overseas?

How are you going to persuade people that the IOM is a safe place to put their deposits?

[MilitantDogOwner]

It's far too early to be raising VAT to 20%, the economy isn't ready for that.

You reckon? We are already years behind the rest of Europe on VAT. Vat should be put up to 20% (minimum) ASAP, and the interest rate should be put up to be at lease on par with the Euro, preferably slightly higher to attract deposits and investments from overseas. The sooner it is done the better it will be for the economy in the long term. In the short term it will hurt whether they did that or not.

 

Deposits from overseas?

How are you going to persuade people that the IOM is a safe place to put their deposits?

 

Do we really need to though? There must be plenty of people still depositing in the IOM and there will be plenty more in the future otherwise there would be alot less bankers employed in the IOM finance sector.

 

I think you need to get a new bone fido.

[manshimajin]

The thing I wonder about the bank 'bonus culture' which has escalated over the last 20 years or so is - has it actually delivered better benefits and value for the clients and the shareholders? Otherwise why is it needed? Just paying yourself for for not actually improving the situation for clients and owners would confirm that bankers are wankers. Overall share prices increased, people got into a high interest credit culture, risk taking rose unacceptably and more and more activity was based on commission (oh sorry that's a dirty word - 'fees'). Certainly economies boomed but on a bubble.

 

Today's Lex column in the FT points out that the idea of a mass exodus from the City of London to 'an Alpine tax haven' is "absurd". They also quote Angel Merkel as saying tax on bonuses is "a charming idea".

 

IMO the bank boards have 'nothing to fear but fear itself'.

[Cambon]

Deposits from overseas?

How are you going to persuade people that the IOM is a safe place to put their deposits?

 

This thread is about your country, not the IOM. Your country, you know the one that is in such shit it is stealing from anywhere it can - The odd half billion from KSFIOM, for example.

[Cambon]

Are you still hinting at the fact that you believe government is the reason for the financial crisis? And whether the conservatives are in government or Labour, not much is going to change.

 

Not quite. I believe the financial crisis in the UK is down to one man, Gordon Brown, who did things like deregulate the banks, sell the country's gold, and start the situation that has put the UK where it is today.

[La_Dolce_Vita]

The banks were deregulated a long time before Brown became Chancellor. Do you completely ignore the knock-on effect of a 'national' financial crisis in the USA impacting on the UK? Does you see it as relatively coincidental that the banks looked to fall not long about the sub-prime marked in the US collapsed?

[Cambon]

The banks were deregulated a long time before Brown became Chancellor. Do you completely ignore the knock-on effect of a 'national' financial crisis in the USA impacting on the UK? Does you see it as relatively coincidental that the banks looked to fall not long about the sub-prime marked in the US collapsed?

 

Not really. Brown was the one that separated the governemtn from the bank of england. That was the key point. The government could no longer control the banks through interest and exchange rates. Had they done this they could have effectively limited the UK banks' exposure to US sub prime debt, as did most of the rest of europe. Did not happen, did it? It was all one man's decision.

[pongo]

Brown was the one that separated the governemtn from the bank of england. That was the key point. The government could no longer control the banks through interest and exchange rates. Had they done this they could have effectively limited the UK banks' exposure to US sub prime debt,

 

That's 100% bollocks. The (largely theoretical) independence of The Bank to set short term interest rates has nothing to do with the finance sector's exposure to complex credit default swap derivates and other instruments - the CDOs etc. And the history of the use of those instruments long pre dates the Labour govt. Credit default derivates were devised by a team at JP Morgan in London during the PM Major years. The first deal involved the European Central Bank IIRC. Ironically these instruments had been designed to offset risk. It was all about repackaging and insuring risk.

 

There was an international problem of regulation because these and other instruments were not regulated anywhere and because the Rating Agencies failed to understand how they worked. These things form a part of what is called the 'shadow banking system' - which is an important part of how international credit works. The EU, the Fed the BOE and others (and the industry itself) simply had no comprehension until around 2005 just how unbalanced the system had become. There were a whole bunch of issues. Some in the Hedge Fund industry tried to warn of the possibility of a problem - but were ignored (by the Germans in particular) who were convinced that the Hedge Funds themselves were the problem.

 

ETA: No govt would have prevented any bank from buying into the market for these complex instruments because, simply, no govt understood the market. It was an unknown unknown unfortunately.

[La_Dolce_Vita]

Deposits from overseas?

How are you going to persuade people that the IOM is a safe place to put their deposits?

 

This thread is about your country, not the IOM. Your country, you know the one that is in such shit it is stealing from anywhere it can - The odd half billion from KSFIOM, for example.

But the Isle of Man depends on the wealth produced in other nations and by other people in order to largely sustain its prosperity.

[bellyup]

It's far too early to be raising VAT to 20%, the economy isn't ready for that.

You reckon? We are already years behind the rest of Europe on VAT. Vat should be put up to 20% (minimum) ASAP, and the interest rate should be put up to be at lease on par with the Euro, preferably slightly higher to attract deposits and investments from overseas. The sooner it is done the better it will be for the economy in the long term. In the short term it will hurt whether they did that or not.

 

Deposits from overseas?

How are you going to persuade people that the IOM is a safe place to put their deposits?

 

Do we really need to though? There must be plenty of people still depositing in the IOM and there will be plenty more in the future otherwise there would be alot less bankers employed in the IOM finance sector.

 

I think you need to get a new bone fido.

 

I wish I could but unless i get my own buried bones back I will keep gnawing at this one.

Actually deposits in the IOM are down.

[MilitantDogOwner]

Any proof to your claim SoreBelly?

 

Besides who would of thought it deposits down during a recession? Who would of thunk it?