As if UK Prime Minister Gordon Brown wasn't unpopular enough, his government has added insult to injury by stinging UK bankers with an extra 10% tax on their bonuses. For one year only (thus far) City high rollers will have to pay 50% tax on their bonuses. The government is also adding taxation to employer pension contributions. The UK Finance Minister (unbelievably) thinks that this will deter banks from paying out-sized bonuses (and contributing to 'wealthy' people's pensions) for a year where profits were fueled by government bailout money. I can see his point, but he obviously does not know the beast. Traders will threaten to walk if their employers don't make up the difference in bonus. This has happened before. There are already teams of accountants and lawyers working with City types to try and find ways to prevent City boys from 'suffering' unduly.
If the employers cave in to traders demands, it means that the bonus pots increase and the actual amount that employees get will also increase. This erodes shareholder value, and is the exact opposite of what the much-deluded Labour government is trying to achieve. Otherwise it means that employers will simply defer bonuses until next year - paying only a small percentage this year and staggering the rest over the next couple of years.
I can see that the Labour party's ludicrous solution will appeal to the unemployed or blue collar workers in the UK. Those on the dole that sit around all day shouting at the telly will cheer. But the UK middle and upper classes will not. It took a long time for paychecks in London to equate even remotely with competitor cities such as New York or Geneva. Watch out for mass emigration.
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