January 6, 2010
The following story has been published by EurActiv.com on 6th January 2010.
Franco-British plans to introduce a one-off supertax on bankers’ bonuses hit a snag when the asset management sector won exemption from a draft UK law after threatening to leave the country. A related European law could face similar difficulties.
Britain and France both announced plans for a one-off 50% tax on bankers’ bonuses above £25,000.
But the UK’s big hitters have shown they will not accept the tax without a fight and say they will leave the country if the government introduces it.
The UK’s asset management industry secured immunity from the planned tax on 24 December, according to the Investment Management Association (IMA), which represents the UK’s £3 trillion asset management industry.
Richard Saunders, chief executive of the IMA, said a revision by the country’s Revenue and Customs (HMRC) authority “clearly indicates that the final legislation will ensure that asset and fund management firms will not be liable to pay this tax”.
Investment banks threaten to leave London
Morgan Chase has joined investment bank JP Morgan in threatening to move its European operations outside of the City of London if the tax comes into force.
Yesterday (5 December) London’s mayor, Boris Johnson, weighed into the debate by saying that the industry’s fury should be a wake-up call to the country’s leaders to drop the tax.
However, analysts argue that the banks’ threats are easier said than done as relocations are costly and will not happen overnight.
“It would take years for a bank to move its human capital and infrastructure to another location,” argues Karel Lannoo from the Brussels-based Centre for European Policy Studies (CEPS).
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