London mayor sees exodus due to taxes
By Jane Wardell |
January 16, 2010, Saturday
|
Print Edition
Print Edition
LONDON Mayor Boris Johnson has warned that thousands of high earning bankers will flee the city because of the government's tougher taxes on bonuses.
In a letter to Treasury chief Alistair Darling released yesterday, Johnson seeks an urgent meeting to discuss the introduction of new tax rates for top earners and a temporary 50 percent levy on bank bonuses above 25,000 pounds (US$40,700).
"You have made unilateral changes to taxation that risk damaging London's competitiveness and its status, alongside New York, as the world's leading financial-services center," Johnson wrote in the letter.
He estimated about 9,000 bankers may relocate abroad, with knock-on effects on London's legal, accountancy, publishing and media industries and a reduction in the tax resources available to fund public services.
"The government is doing nothing more than fast-tracking the departure of this talent pool out of Britain and into the welcoming arms of our competitors," he added.
However, some lawmakers and analysts said Johnson's warning was undermined by plans announced by United States President Barack Obama on Thursday to tax US banks to recoup the public bailout of foundering firms at the height of the financial crisis.
Obama is proposing a tax of 0.15 percent on the liabilities of large financial institutions. It would apply only to those companies with assets of more than US$50 billion -- a group estimated at about 50. That initiative led to calls for British Prime Minister Gordon Brown to impose similar levies on British banks to pay back some of the estimated 850 billion pound cost of the taxpayer-funded bailout of financial institutions.
John Mann, a member of the ruling Labour Party, said the new US tax had "delegitimized" claims bankers will flee abroad to avoid levies in Britain.
In a letter to Treasury chief Alistair Darling released yesterday, Johnson seeks an urgent meeting to discuss the introduction of new tax rates for top earners and a temporary 50 percent levy on bank bonuses above 25,000 pounds (US$40,700).
"You have made unilateral changes to taxation that risk damaging London's competitiveness and its status, alongside New York, as the world's leading financial-services center," Johnson wrote in the letter.
He estimated about 9,000 bankers may relocate abroad, with knock-on effects on London's legal, accountancy, publishing and media industries and a reduction in the tax resources available to fund public services.
"The government is doing nothing more than fast-tracking the departure of this talent pool out of Britain and into the welcoming arms of our competitors," he added.
However, some lawmakers and analysts said Johnson's warning was undermined by plans announced by United States President Barack Obama on Thursday to tax US banks to recoup the public bailout of foundering firms at the height of the financial crisis.
Obama is proposing a tax of 0.15 percent on the liabilities of large financial institutions. It would apply only to those companies with assets of more than US$50 billion -- a group estimated at about 50. That initiative led to calls for British Prime Minister Gordon Brown to impose similar levies on British banks to pay back some of the estimated 850 billion pound cost of the taxpayer-funded bailout of financial institutions.
John Mann, a member of the ruling Labour Party, said the new US tax had "delegitimized" claims bankers will flee abroad to avoid levies in Britain.
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