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Bonus tax could hit bank lending

The Tories and Liberal Democrats poured scorn on Labour’s introduction of a 50 per cent one-off levy on bank bonuses over £25,000, saying it would be about as effective as the lending agreements imposed on the stateowned banks.

Speaking after Chancellor Alistair Darling’s pre-Budget report, Conservative Shadow Chancellor George Osborne questioned whether the measure would impinge on bank lending rather than put a stop to big bonuses.

He said: “Let’s be clear, they are going to pay out a load of bankers’ bonuses that they should not have been paying out in the first place, then put a oneyear windfall tax on them and declare it a triumph.

“The real test of this new tax will be whether it curbs bank bonuses instead of curbing bank lending and let us hope that it is more effective than those binding lending agreements which we once heard so much about at that dispatch box.”

Liberal Democrat Shadow Chancellor Vince Cable said the tax would be difficult to enforce, saying the levy should be on bank profits as opposed to bonuses.

Cable said: “How will you stop the banks converting the bonuses into their basic salaries? You need not to try to tax bankers separately from high-earners but to have to pay a levy on bank profits because they rely on the taxpayer guarantee.

“They have got to pay for this taxpayer insurance until they have paid back the taxpayer.”

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