Pre Budget is one of the biggest events in the UK politics. Today it is being delivered in the British House of Commons by Alistair Darling. He plans to introduce one-time 50 percent tax on banks' bonus payments.
As the Pre Budget is a very big political even in UK, the delivery and the controversial bank bonus tax have already created quick reactions from left and right. The goal is to raise nearly £550m to finance public projects.
Darling told in his Pre Budget report that bank bonus tax will be levied on the employer effective today on bonuses of more than £25,000. The UK Treasury estimated that nearly 20,000 people will be affected by this bank bonus tax. Darling, as thhe Chancellor of the Exchequer, is now always Second Lord of the Treasury as one of the Lords Commissioners for executing the office of Lord High Treasurer.
Big bank bonuses have created voter and public anger not only in UK, but also in the United States. The big bonus controversy with AIG executives is still fresh in voters' mind. AIG planned to pay 100 million dollar bonuses, while cutting salaries.
The skeptics, referring to the Pre Budget report, say that bank bonus tax is unlikely to raise £500 million. The word came from BDO Stoy Hayward, who questioned the tax and how it will raise £500 million.
People mistakenly may think that the bank bonus tax, announced in Darling's Pre Budget repot is taxing bankers. "It's not a tax on bankers, but the bank's bonus pool. ITO behavior, it might encourage banks to reduce guaranteed bonuses," tweets Greg Woodford.
The Canadian-based Report On Business says the people, call the bank bonus tax as "populist, political and penal."
There are critics and those who support the major change in the Pre Budget announcement. However, what is the goal of this bonus taxation. "The real test of new bonus tax is whether it will curb bank bonuses instead of curbing bank lending," tweets Shawas Mund.
Indeed, if the UK bank bonus tax is going to curb those ridiculous bonuses when millions of people are without jobs it is a good point included in the Pre Budget announcement. However, if it is not going to curb the human greed and instead is going to curb bank lending for small businesses and mortgages, the tax may be another problem for the struggling economy.
Written by Armen Hareyan
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