Monday, February 09, 2009

Bankers' Bonuses Tax Act 2009



Another day, another terrible opinion poll for Labour. This one has the Tories on 42%, Labour on 28% and Lib Dems on 18%.

What is particularly sad at the moment is that the government just seems so pathetic - like Gordon Brown (who I like and respect) urging the bankers not to take their bonuses and saying he is very cross about it.

He's the Prime Minister of a government which is going to be in power for at least another year with a comfortable majority. He doesn't have to "urge" bankers or express moral outrage about their behaviour - he can tell them what to do and if they don't like it then that's their tough luck.

And for all this 'it is in their contracts that they get bonuses', so what? Just pass a new law called something like the "Bankers' Bonuses Tax Act", which states that any bonus paid to a banker over £5,000 gets taxed at a rate of 110%. It probably doesn't even need an Act of Parliament.

It's a really galling contrast that when it comes to asylum-seekers or large families in social housing, policies to 'appease public concern' get dashed off with ease, irrespective of merit. And yet somehow when it comes to bankers behaving in the most disgracefully anti-social way and taking the piss out of the taxpayer on a gigantic scale, all our government does is tut and set up a review.

It is a horrendously difficult time for all government ministers, and Gordon Brown most of all, trying to help people in the midst of this terrible economic crisis. He's an intelligent, clever and decent man, and we'll miss him desperately if the polls are correct and the next Prime Minister is a man who has been wrong on every single important issue of the past few years and whose skills are all about public relations and little else. But one of the reasons Labour is getting kicked about at the moment is that it is all a mix of either crisis management and being 'tough' on the most vulnerable.

There is so much good that our Labour government could achieve over the next year, and that would help to revive our fortunes electorally. But it's got to start by standing up for the little guy and picking and winning some fights with the rich and the powerful, and there is no better place to start than with these bankers.

7 Comments:

At 11:08 pm , Anonymous tim f said...

Yes. The "do nothing" attack line doesn't work if on the issues people care about you are, er, doing nothing.

The public wants the state to take control right now, so let's.

 
At 11:25 am , Anonymous Duncan W said...

Completely agree. These people are taking the piss.

Excellent piece on the FT blog yesterday:

http://ftalphaville.ft.com/blog/2009/02/09/52218/through-an-efficient-market-glass-darkly/

 
At 11:32 am , Anonymous Duncan W said...

Equally a lot of the debate is totally missing the point.

All the focus on 'executive' and 'senior managers' is beside the point.

The real proble is people of associate to vice president level (mid twenties to about 40) who are paid a basic of between 80k and 250k and then expect a bonus of 100/200%.

This is also the robolem with the Obama plan - it'll stop bonuses for managers but not traders.

I actually get pretty angry about this. In no other line of work do highy paid individiausl demand a bonus for doing their job well. It should just be expected.

And as for the threat that'll they go and get another job - I simply don't buy it. No one is hiring.

 
At 6:36 pm , Anonymous Pete said...

But Duncan, you said the other night that they would just leave if they didn't get the bonus?

 
At 9:30 pm , Anonymous Duncan W said...

And so what if they do?

Do we need a state owned trading operation and investment banking division?

Plus, no one is hiring.

 
At 11:55 pm , Anonymous Anonymous said...

AMENDMENT

All bonus to staff above the grade of Senior Manager shall be limited to 25% of grade salery. Any bonus paytment to higher grades, or in excess of £25,000, shall pay income tax on the bonus at 110%.

National insurance contributions shall be paid at Class 1 schedual D

 
At 1:08 am , Anonymous Ben said...

Hmmm.

I agree entirely that the idea of individuals in institutions bailed out by the taxpayer receiving substantial bonuses is pretty extraordinary. It seems to me that, by default, if you lose your owners substantial proportions of their equity and then need to go begging to the government then you have, ah, failed the "pay for performance" criterion those of us who like a bit of corporate governance are so keen on.

Nonetheless, I would be quite surprised if in these testing times the government felt that it might best spend its legislative time on restricting substantial bonus payments to a fairly paltry number of people...

 

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