Banker tax announced in UK

From the pre-Budget report, via Reuters:

DARLING - WILL CHARGE BANKS 50 PCT TAX RATE ON STAFF BONUSES OVER £25,000

(That’s on top of the 40 per cent tax rate that already applies to the UK’s highest earners.)

Other highlights:

Economy:
DARLING - EXPECTS UK GDP TO GROW 1.0-1.5 PCT IN 2010, UNCHANGED FROM EARLIER ESTIMATE

DARLING EXPECTS UK GDP TO GROW 3.5 PCT IN 2011 AND 2012

DARLING - CPI INFLATION WILL RISE FROM 1.5 PCT TO AROUND 3 PCT EARLY 2010 BEFORE FALLING.

Bank Intervention:
DARLING - HAS CUT PROVISION FOR LOSSES FROM FINANCIAL INTERVENTION TO 10 BLN STG FROM 50 BLN.

Borrowing:

DARLING- EXPECTS 178 BLN STG PUBLIC SECTOR NET BORROWING IN 09/10 VS EARLIER 175 BLN

DARLING - EXPECTS 176 BLN STG PUBLIC SECTOR NET BORROWING IN ‘10/11 VS EARLIER 173 BLN FORECAST.

DARLING - EXPECTS 140 BLN STG PUBLIC SECTOR NET BORROWING IN ‘11/12, 117 BLN STG IN 2012/13

DARLING - EXPECTS 2013/14 PUBLIC BORROWING TO BE 96 BLN STG, 82 BLN STG IN 2014/15

DARLING - EXPECTS NET DEBT TO REACH 56 PCT OF GDP 2009/10, PEAKING AT 78 PCT IN 2014/15

http://ftalphaville.ft.com/blog/2009/12/09/87961/banker-tax-announced/

Outsch.

 

How did Gilts do on this announcment? I can't expect they liked the news.

 

FTSE seems ok, despite the fact that Financials are the heaviest weighted index.

 

Actually, gilts like the news... Mkt was more or less expecting 230bn issuance for next year, but the DMO only announced 225.1bn (Darling gave a figure of 220bn, interestingly).

 

NI has been raised by 0.5%...America, prepare for tax hikes

 

Huh? From Marketwatch 7:45 A.M. ...

10Y Gilt Yield Climbs To 3.747% On Pre-Budget Report

Mar Gilts Fall 20bps To 116.43 On Pre-Budget Report

 

absolutely amazing - marx has not dreamt about things like that even in his wildest dreams.

 

Some bonus maths from a City trader:
(typos, spelling, calculation errors not ours)
RE-BOOK THOSE FLIGHT TO GENEVA, HERE’S WHY…
Here is the working of the new bonus scheme: Just for example: The bank pays you $100,000, then the bank pays $50,000 to the Treasury, then you get paid $50/- (Remeber, from your original $100/-) and you pay 50% on that….hence, if you clear $100/-, you’ll get $25/-… Is there any reason why Messrs GS, UBS, Deutsche, BOA, BNP (all strong British Companies) will have ANY reason whatsoever, to stay in the UK… Thank you, its been marvelous, good night….



LMAO !

I suggest selling British real estate stocks should be a good idea, or ?

 

well i do not think that's the way it is supposed to work but it does not matter - the point is there. even marx was extreme right compare to this confiscation.

if you get say gbp100k bonus then bank pays additional gbp50k to exchequer and you pay him about gbp40k tax (this year's marginal tax in uk). so for every gbp100k bonus treasury gets gbp90k - lol. so all in all the tax is 60% (90/150).

 

bonus 100k

bank to pay 50% tax on 75k of the 100k = 37.5k ( 50% one off tax on bonus value in excess of 25k)

bonus recipient to pay 40% on 100k = 40k ( not quite that much but i cant be bothered to do the other calculations)

total tax on 100k = 77.5k

bonus recipient to receive 22.5k from original 100k bonus

good news for all the global warming dudes who will be getting excited when they find out the river thames has risen (all those tears from canary wharf)