The bank bonus season is set to spark the first big political crisis for the coalition – George Osborne resisting the Liberal demands for tough action if bankers pocket unrealistic pay outs. Even the deputy prime minister, Nick Clegg, got into the act, warning the coalition there would be “serious action” taken if the bankers payed themselves outrageous bonuses. The business secretary, Vince Cable, commented on the issue of banker’s pay, saying: “Banks face a potential train crash if they ignore public opinion.”
The precursors to the ultimate showdown about the banking sector pay read like this: Clegg and his party are in total opposition to the bankers paying themselves excessive amounts when the country is still in such peril. On the other side of the table sits Osborne, who believes the banking sector has had acceptable regulations imposed on it, and new levies placed on the industry would be unreasonable.
The banks have had a tax levied against them that are in place to curtail bonuses. This levy was placed on them by the Coalition as the financial crisis unraveled.
Osborne believes the tax did little to change pay out amounts. The latest figures suggest banks simply dealt with the pain and continue business as usual.
The details of the levy are as follows. A 50 per cent tax was imposed on bonuses more than 25,000 pounds in size.
The Liberal Democrats last hope against the culture of big bonuses is an idea being pursued through the International Monetary Fund. It is being referred to as an activities tax on bank pay and profits.