UK Plans to Tax Banker Bonuses and Impose 50% Levy

London Mayor Boris Johnson is revolting against U. K.'s plans to tax banker bonuses and impose a 50 percent levy on incomes above 150,000 pounds ($245,000), stressing to Chancellor Alistair Darling that they jeopardize economic growth.

The levy on bonuses, to be paid by banks, comes after the Treasury spent 117 billion pounds to rescue the banking system amidst the financial turmoil.

The new 50 percent income-tax rate will leave U. K. residents earning more than 1 million pounds a year worse off than they would be in any of the world’s other financially stable countries, according to accounting firm KPMG.

He speculates that the result could lead to around 9,000 bankers to relocate abroad, hampering the financial services industry here and also slumping servicing firms, including legal, and accounting and media firms.

The tax on bonuses will be biased towards companies that did not need government assistance thereby affecting London, Johnson said.

A Treasury spokesman cited that Britain will remain adamant towards this because of its low cost of capital and as it has one of the lowest tax rates on company profits among Group of Seven countries.