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Chancellor will not move on bonus tax

Chancellor Alistair Darling has warned banks that he will not water down the 50 per cent tax on bank bonuses despite many banks saying it will lead to an exodus of staff from the City.

 

Banks have claimed that the tax, introduced in the pre-Budget report last week, will lead to key staff and offices moving offshore in order to avoid paying it and have called on the Chancellor to make it less onerous.

But according to The Financial Times, an aide to the Chancellor said the banks do not seem to realise the tax has been introduced to change their behaviour and the solution is for the banks to pay less in bonuses.

City minister Lord Myners also entered the fray saying he would not apologise over the introduction of the supertax. He said that disgruntled staff should complain to their employers if the bonuses were cut and not to the Treasury.

The bonus tax is expected to raise £550m in revenues, though banks claim it would raise far more.

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  1. Can some one pass the analogy below on to little D 15th December 2009 at 6:58 pm

    Why Labours 60’s/70s envious socialist soak the rich and those bastard bankers policies will not work.

    Those currently drinking for free should be very very worried as eventually they might just eventually find that they have to pay for their own drinks.

    As the great Maggie once said ” The problem with Socialism is eventually you run out of other people’s money.

    Tax System Explained In Beer!

    Suppose that every day, ten men go out for beer and the bill for all ten comes to $100.

    If they paid their bill the way we pay our taxes, it would go something like this?

    The first four men (the poorest) would pay nothing.
    The fifth would pay $1.
    The sixth would pay $3.
    The seventh would pay $7.
    The eighth would pay $12.
    The ninth would pay $18.
    The tenth man (the richest) would pay $59.

    So, that’s what they decided to do..

    The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve.

    “Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily beer by $20.” Drinks for the ten now cost just $80.

    The group still wanted to pay their bill the way we pay our taxes.

    So the first four men were unaffected.

    They would still drink for free. But what about the other six men? The paying customers?

    How could they divide the $20 windfall so that everyone would get his fair share?’

    They realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer.

    So, the bar owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

    And so the fifth man, like the first four, now paid nothing (100% savings)
    The sixth now paid $2 instead of $3 (33% savings).
    The seventh now pay $5 instead of $7 (28% savings).
    The eighth now paid $9 instead of $12 (25% savings).
    The ninth now paid $14 instead of $18 ( 22% savings).
    The tenth now paid $49 instead of $59 (16% savings).

    Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.

    “I only got a dollar out of the $20,”declared the sixth man.

    He pointed to the tenth man,” but he got $10!”

    “Yeah, that’s right,” exclaimed the fifth man. “I only saved a Dollar, too. It’s unfair that he got ten times more than I!”

    “That’s true!!” shouted the seventh man. “Why should he get $10 back when I got only two? The wealthy get all the breaks!”

    “Wait a minute,” yelled the first four men in unison. “We didn’t get anything at all. The system exploits the poor!”

    The nine men surrounded the tenth and beat him up.

    The next night the tenth man didn’t show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!

    And that, boys and girls, journalists and college professors, this is how our tax system works.

    The people who pay the highest taxes g et the most benefit from a tax reduction.

    Tax them too much, attack them for being wealthy, and they just may not show up anymore.

    In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

    David R. Kamerschen, Ph.D.
    Professor of Economics
    University of Georgia

    For those who understand, no explanation is needed.

    For those who do not understand, no explanation is possible.

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