Reuters reports:

Britain looks set to reap a windfall of at least 2 billion pounds as its controversial tax on bank bonuses fails to deter banks from paying a round of big payouts.

With around three weeks to go before 2009 bonus packages are signed off, banking sources dismiss original government estimates that the 50 percent tax on bonuses over 25,000 pounds would raise around 550 million pounds.

At a time when the public purse is tight, this will be welcome news for many within government. We have gone from £550 million to £2 billion.

Inevitably there is criticism from the Financial Times, which has declared the tax a failure because it failed to stop banks from giving out huge bonuses.

But was it all a waste of a time? The Guardian’s Nils Pratley says it points to a deeper problem:

The episode has at least demonstrated that shareholders, who ultimately bear the cost of the bonus tax, are a supine bunch. Institutional investors were meant to act as the policemen here, telling banks to preserve capital instead of paying an avoidable tax. These big investors have failed to speak out. It’s time for the likes of Legal & General, Prudential, Fidelity, Schroders and Aviva to explain why.

Earlier this week the impending imposition of the bankers bonuses tax led London’s occasional Mayor Boris Johnson to complain.
He said:

I am extremely anxious about rumours in the City that seem to confirm that the recent knee-jerk and ill-thought-out tax grab by the Government to punish bankers is causing some of our most important institutions to consider their options,

Funny. He doesn’t have a problem with punishing London’s poor commuters, only rich bankers.

Reader comments

1. Liberal Conspiracy

   :: UK to get £2bn from bankers' bonuses tax http://bit.ly/6JaMPS

2. compassyouth

   UK to get £2bn for bankers bonuses tax, what wld u spend it on? http://bit.ly/4YQGuL h/t @libcon

3. Liberal Conspiracy

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