London Bankers Look for Exits After ‘Last Straw’ Tax Increase

April 27 (Bloomberg) -- Demetris Efstathiou, a hedge-fund trader and a Londoner for two decades, listened last week to Chancellor of the Exchequer Alistair Darling outline a plan to raise taxes on high earners. Then he decided to leave Britain.

“There is no reason for me to stay here anymore,” said Efstathiou, a 38-year-old Cypriot who moved to London in 1990. “This tax increase is the last straw. This government is no longer interested in the City.”

Prime Minister Gordon Brown’s proposal to boost the tax rate to 50 percent from 40 percent on income above 150,000 pounds ($220,000) pushed headlines about “class warfare” onto the front pages of the capital’s newspapers. It also prompted predictions from business groups that it would undermine the U.K.’s competitiveness and lead to an exodus of financial talent. Brown was portrayed as Vladimir Lenin in a cartoon on Page One of the Daily Telegraph.

The income-tax change, set to take effect next year, would give the U.K. a higher top rate than Spain, Italy, Germany, France and the U.S., according to KPMG, the accounting firm. Among the 30 members of the Organization for Economic Co- operation and Development, the country would jump to seventh from 19th in the rankings of tax rates, accounting firm Ernst & Young said.

The initiative is part of the government’s efforts to contain a planned budget deficit of 12.4 percent of gross domestic product, Britain’s biggest in peacetime. The Treasury expects the tax to raise about 2.2 billion pounds next year when government borrowing will be 173 billion pounds. Darling’s budget calls for 703 billion pounds of deficits in the five years through April 2014.

How Increase Works

Under the new rates, a banker making 350,000 pounds would pay 160,000 pounds in income-tax and national-insurance contributions, according to a government online tax calculator. That’s 22,600 pounds more than the current amount and doesn’t include the elimination of tax relief on the first 6,000 pounds of earnings and the reduction of breaks for pension contributions that Darling is also introducing.

About 350,000 people in the U.K. earn more than 150,000 pounds annually, according to the London-based Institute for Fiscal Studies. About 750,000 make more than 100,000 pounds, and their taxes will also increase after the government scrapped a personal tax-free allowance.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aKCdIuHonoTM&refer=home

Hum...does that mean 22.600 GBP less "spending power" x 350.000 = 7.91 billion GBP ?

 

The potential "dirty secret" is that a lot of those ~350,000 people are a big part of the reason why Britain is in the mess that it is in. To cleanse the country of them can have longer-term benefit. We'll see.

 

LOL !!!

 

You'll be ":eek: "-ing or " "-ing if Switzerland does something similar.

 

Please explain to us Yanks. Hard to see how it is that those who pay the most are the root of "the problem"... ??

If you "cleanse" the country of those who pay the most tax, who is left? Who pays the bills? Aren't you left with just a Socialistic circle-jerk when all the big tax payers are gone??

 

Because these high earners in the financial sector are the ones that created and invested in what are now the toxic assets that have caused the financial implosion. This is basic knowledge.

 

Bankers have created a multi quadrillion derivatives shadow banking system that is now exploding and will be tried to be saved by hyperinflating the currency.

Something like that probably.

You know, like the 'Hank Paulson and other gools from Goldman Sachs have hijacked the US economy' theory.

 

Irony, there. You know, like "the man who was saved from bleeding to death but who died from the tourniquet around his neck".

 

many are moving to hkg, singapore,shanghai, basically all the chinese nations in the far east

 

And just how many Chinese nations are there now?