The one-time windfall tax, which would affect not only British banks but also the London subsidiaries of Wall Street firms, is designed to return money from banks to taxpayers by placing a 50% tax on banker bonuses of more than $40,000. According to Mayor Johnson, as a result of the measure as many as 9,000 bankers may leave London to escape the most direct attack on bank bonuses anywhere in the world.
This may permanently damage London’s competitiveness, Johnson said today in a statement.
Bloomberg: “Such ill-thought-out plans come at a time when there is light at the end of the recessionary tunnel and London is excellently placed to compete and prosper,” Johnson said. “That prosperity will be threatened and the whole U.K. economy will suffer if our financial sector is denied a stable tax and regulatory regime.”
According to Bloomberg news, one major global bank has told the mayor’s office that 1,600 workers have asked for help in relocating from the U.K. Mr. Johnson said “…another bank told [him] that it is considering moving 700 to 800 staff from London.” He claimed losing so many highly-skilled staff could cost up to $2 billion in lost revenues.
JP Morgan (JPM) and Goldman Sachs (GS) are also understood to be among banks considering moving staff and operations abroad.
THIL: A senior source in the Mayor’s office reiterated that the Mayor “is determined to highlight to everyone….that this [bonus] tax is already having an adverse impact and should it become a more permanent feature of [Britain’s] tax system it would have an extremely devastating impact on London’s long-term prosperity”.