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UK financial watchdog supports bonus tax

UK financial watchdog supports bonus tax

The head of Britain's financial regulator said Thursday he would back higher taxes on the financial services sector to curb firms' excessive profits and bonus payouts.
Adair Turner, the chairman of the Financial Services Authority, also said that the sector had "grown beyond a socially reasonable size."
"If you want to stop excessive pay in a swollen financial sector you have to reduce the size of that sector or apply special taxes to its pre-remuneration profit," Turner was quoted as saying in Prospect magazine.
"Higher capital requirements against trading activities will be our most powerful tool to eliminate excessive activity and profits," he added.
Turner said that he was happy to consider so-called Tobin taxes, charges on foreign exchange transactions that were originally proposed by the economist James Tobin in the 1970s to discourage speculative trading.
Turner said that some of the city's activity was "socially useless," and said it had "swollen beyond its socially useful size."
The Financial Services Authority earlier this month outlined proposed new rules on bankers' pay, but critics have argued that the proposed changes are too weak.
The code included stopping bankers from getting bonuses at high multiples of their salary or bonuses guaranteed for more than a year. Banks that fail to comply could face higher capital charges or other punitive action.
Treasury chief Alistair Darling said the government was ready to bring in laws to curb the sort of big bankers' bonuses that helped trigger the global financial crisis.
The British Bankers' Association, which has warned that introducing regulation in Britain would only drive business overseas, said that any new tax or regulatory changes would need to be introduced on an international basis.
"The Tobin tax ... was proposed by economists, has been discussed for many years but has never been applied," BBA Chief Executive Angela Knight. "The reason it has never been applied is because of all the adverse consequences you get out at the other end."


Updated : 2021-08-01 20:11 GMT+08:00