Major U.S. banks including Bank of America (NYSE: BAC), JP Morgan Chase (NYSE: JPM) and Morgan Stanley (NYSE: MS) will be paying up to £1 billion to the British treasury as part of the country’s banking bonus tax.
A new survey from the Financial Times of London among 16 global banks predicts that the British Treasury will collect more than £2.5 billion ($3.75 billion) as a result of the new tax that the country as placed on executives in the banking industry.
Last December, British Chancellor Alistair Darling announced that there would be a one-time levy of 50% that would be charged on bonuses of more than £25,000, with banks footing the bill rather than employees. The legislation was designed to encourage banks to cut the amount they had planned to pay in staff bonuses and Darling initially said that he expects the tax to bring in about £550 million.
Although the majority of taxes that will be collected will be paid by European banks, the survey indicated that large-cap U.S. banks including JPMorgan Chase, Bank of America, Morgan Stanley and UBS would likely be paying a total of at least £1 billion in banking bonus taxes.
The number that the Financial Times came up with is a rough estimate since the U.S. banks have so far declined to reveal their planned bonuses figures.
Darling is expected to announce how the collected money will be used when delivering his Budget address later this month. Some have speculated that the funds might be used toward tackling youth unemployment or providing funding for “industries of the future.”
