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| Banks 'face windfall bonuses tax' | Banks 'face windfall bonuses tax' |
| (about 2 hours later) | |
| The Treasury is preparing to levy a one-year windfall tax on British-based banks, BBC business editor Robert Peston has learned. | The Treasury is preparing to levy a one-year windfall tax on British-based banks, BBC business editor Robert Peston has learned. |
| Options may include a super-tax on big bonus earners, or a larger employers' National Insurance charge on banks. | Options may include a super-tax on big bonus earners, or a larger employers' National Insurance charge on banks. |
| Another is to tax investment banks directly. Our correspondent said the year-long levy would raise several hundred million pounds. | |
| An announcement could come as soon as Wednesday's pre-Budget report. | An announcement could come as soon as Wednesday's pre-Budget report. |
| Our business editor said the proposals were still being worked on at the Treasury, but he believed an announcement on Wednesday was "more likely than not". | Our business editor said the proposals were still being worked on at the Treasury, but he believed an announcement on Wednesday was "more likely than not". |
| 'Serious damage' | 'Serious damage' |
| Writing in his blog, he said: "The Treasury believes that the City of London would not lose massive numbers of employees or business to rival financial centres if a super tax lasted just a few years. | Writing in his blog, he said: "The Treasury believes that the City of London would not lose massive numbers of employees or business to rival financial centres if a super tax lasted just a few years. |
| "However it fears there would be serious damage to Britain's financial services industry if banks or bankers based in the UK were perceived to pay much more tax than those elsewhere." | "However it fears there would be serious damage to Britain's financial services industry if banks or bankers based in the UK were perceived to pay much more tax than those elsewhere." |
| The Treasury is preparing to levy a windfall tax or super tax on British based banks, which could be announced as soon as Wednesday in the pre-Budget report Robert Peston, BBC business editor Peston: Banks face windfall tax Send us your comments | The Treasury is preparing to levy a windfall tax or super tax on British based banks, which could be announced as soon as Wednesday in the pre-Budget report Robert Peston, BBC business editor Peston: Banks face windfall tax Send us your comments |
| State-owned Royal Bank Scotland reportedly wants to pay a total of £1.5bn in bonuses to investment banking staff, and the board has threatened to quit if the government blocks the move. | State-owned Royal Bank Scotland reportedly wants to pay a total of £1.5bn in bonuses to investment banking staff, and the board has threatened to quit if the government blocks the move. |
| Speaking on BBC One's Andrew Marr Show earlier, Mr Darling played down speculation about a windfall tax. | Speaking on BBC One's Andrew Marr Show earlier, Mr Darling played down speculation about a windfall tax. |
| He said the government had a "veto" over bonuses at RBS but said the bank had "not come to us with any proposals at all at the moment because they don't yet know what the end of year position will be". | He said the government had a "veto" over bonuses at RBS but said the bank had "not come to us with any proposals at all at the moment because they don't yet know what the end of year position will be". |
| But he stressed: "These bonuses have to be reasonable and they have to be responsible and I think everyone has to accept that." | But he stressed: "These bonuses have to be reasonable and they have to be responsible and I think everyone has to accept that." |
| 'Gifted vast profits' | 'Gifted vast profits' |
| He added: "We are not going to be held to ransom by people who believe you can pay extraordinarily high bonuses without regard to what's going on." | He added: "We are not going to be held to ransom by people who believe you can pay extraordinarily high bonuses without regard to what's going on." |
| City commentator David Buik says the windfall tax plans sound "insane" | City commentator David Buik says the windfall tax plans sound "insane" |
| But he acknowledged also that there had to be "sufficient incentives" to ensure RBS got back onto a "proper footing" and off the government's books. | But he acknowledged also that there had to be "sufficient incentives" to ensure RBS got back onto a "proper footing" and off the government's books. |
| Mr Peston said that if a windfall tax was imposed it would raise "considerably more than £1bn a year" and it would not just apply to UK banks such as Barclays, HSBC and Royal Bank of Scotland, but also to the British arms of overseas firms, such as Goldman Sachs, JP Morgan and Deutsche Bank. | Mr Peston said that if a windfall tax was imposed it would raise "considerably more than £1bn a year" and it would not just apply to UK banks such as Barclays, HSBC and Royal Bank of Scotland, but also to the British arms of overseas firms, such as Goldman Sachs, JP Morgan and Deutsche Bank. |
| "The fact is that we have gifted vast profits to the banks as a result of our actions," Peston quotes one minister as saying. | "The fact is that we have gifted vast profits to the banks as a result of our actions," Peston quotes one minister as saying. |
| "If they were using those profits simply to strengthen themselves that would be okay. But what we can't accept, and what society can't accept, is that they are using those profits to pay enormous bonuses". | "If they were using those profits simply to strengthen themselves that would be okay. But what we can't accept, and what society can't accept, is that they are using those profits to pay enormous bonuses". |
| 'Scandal' | 'Scandal' |
| In the longer term, the prime minister and chancellor want a permanent levy on bank transactions, a so-called Tobin tax. | In the longer term, the prime minister and chancellor want a permanent levy on bank transactions, a so-called Tobin tax. |
| Shadow chancellor George Osborne, for the Conservatives, said he "wouldn't rule out" a windfall tax on bonuses, but would prefer reforms to ensure banks pay tax on future profits. | Shadow chancellor George Osborne, for the Conservatives, said he "wouldn't rule out" a windfall tax on bonuses, but would prefer reforms to ensure banks pay tax on future profits. |
| When the banks start making profits again they should start paying taxes again Shadow chancellor George Osborne Darling warns banks over bonuses Analysis: Manifesto clues? | When the banks start making profits again they should start paying taxes again Shadow chancellor George Osborne Darling warns banks over bonuses Analysis: Manifesto clues? |
| He told the Marr programme: "My message is clear - when the banks start making profits again they should start paying taxes again." | He told the Marr programme: "My message is clear - when the banks start making profits again they should start paying taxes again." |
| The shadow chancellor also argued that no "significant" bonuses should be paid in cash or existing shares to bankers. | The shadow chancellor also argued that no "significant" bonuses should be paid in cash or existing shares to bankers. |
| Liberal Democrat Treasury spokesman Vince Cable told the BBC "a special tax on the banks' profits" should last as long as the "banks continue to depend on taxpayer guarantees". | Liberal Democrat Treasury spokesman Vince Cable told the BBC "a special tax on the banks' profits" should last as long as the "banks continue to depend on taxpayer guarantees". |
| He also dismissed fears that a windfall tax would result in some companies moving out of London. | He also dismissed fears that a windfall tax would result in some companies moving out of London. |
| "I think it's unlikely but some might," he said. "I think a certain degree of contraction, particularly of some of the high risk operators, might actually not be a bad thing, and in any event the government shouldn't allow itself to be held to ransom." | "I think it's unlikely but some might," he said. "I think a certain degree of contraction, particularly of some of the high risk operators, might actually not be a bad thing, and in any event the government shouldn't allow itself to be held to ransom." |