UK slaps tax on bankers' bonuses ahead of election

UK slaps tax on bankers' bonuses ahead of election

Treasury chief Alistair Darling said the tax, to be levied on 2009 discretionary bonuses of more than 25,000 pounds, represented payback time for banks that lost a combined 80 billion pounds last year and needed taxpayer-funded bailouts.

"There are some banks who still believe their priority is to pay substantial bonuses to some already high-paid staff," Darling told lawmakers on Thursday as he delivered the government's pre-budget report in Parliament.

"Their priority should be to rebuild their financial strength and to increase their lending," he added. "If they insist on paying substantial rewards, I am determined to claw money back for the taxpayer."

The tax proposal was clearly aimed at voters, with Prime Minister Gordon Brown's government trailing the opposition Conservative Party in opinion polls ahead of an election that must be held by June, and with Britain in its worst recession since World War II.

Opposition politicians said the bonus tax was political spin that would do little to raise revenue, and the country's banking association said it could damage the country's standing as a financial center. Several economists found little in Darling's report that would spur the economy in the short run, or to cut Britain's spiralling deficit in the long run.