Although the move by Britain’s Alistair Darling to tax up to 50 percent of banking bonuses have giving him and the Labour party a small but temporary boost, it increasingly looks like it could end up being a disaster over the long haul, especially if banking staff begin to flee the fabled banking region to greener pastures.
Remember recently when France appeared to be taking the lead in this area by pushing hard for this tax on their part as well? It looks like they and other countries in Europe will get the last laugh on Britain and Darling, as France has adopted a version of the tax on bonuses, it is so watered down it gives them and other European competitors like Germany, as well as Asian and American competitors the upper hand for attracting quality workers from the UK, as many may be poised to leave as a consequence of the outrageous tax.
Even at this early stage you can see that Darling was baited to initiate this tax by the French, and he completely fell for it, thinking he had some ally that would help him score some solid points with the British public. Now it seems it could completely backfire on him, especially if a mass exodus from the British banking industry starts to happen.
Behind the scenes, British banking leaders have been saying that if the British government doesn’t start acting more friendly to the banking industry, top quality workers will begin to leave London as the preferred place to work. That would be a disaster for Britain, as the industry accounts for approximately £61.4 billion in tax receipts for the entire nation, according to the City of London Corporation.
At this point in time, the number of requests are in the hundreds, as reassurances by Darling that this is a one-off tax is not believed. It’s not just the tax either, but the accompanying rhetoric attacking the banking industry of Britain that has so many from other countries concerned.
Most believe if this is truly a one-off tax, it won’t do too much damage to the banking industry of Britain. If it’s more than that, it could truly be a destructive for that could be very damaging to one of the most successful business sectors in Britain.
I think this move by Darling and his associates could really backfire on them, as France has already looked good in and in a superior position because of the knee-jerk reaction of Darling to imposing populist tax increases which evidently the French had no though of truly imposing on their banks. With very little imposition for those in the industry who would want to migrate from London to Paris, the French may just nab a bunch of quality workers who they wisely positioned themselves to receive from the British banks. Darling isn’t looking too smart in the face of all of this.
Not only that, but if this gains impetus, Darling and Labour will look even more incompetent as British citizens start to realize how they were played and what it could end up costing them.
