9 December 2009
City Policy Chairman comments on Pre-Budget Report
Commenting on today's Pre-Budget Report (9 December), the Policy
Chairman at the City of London Corporation Stuart Fraser said:
"The City welcomes the decision to postpone the 1p rise in
corporation tax, and the creation of a new £500m capital growth
fund designed to help small and medium businesses that are crucial
to the real economy. The City also commends the national
infrastructure spending outlined by the Chancellor.
"A windfall tax on bonuses above £25,000 may appeal to a public
still angry about individual and collective lapses during the
crisis. However, an excessively punitive approach towards
remuneration will benefit nobody.
"A broad brush taxation policy will impact on people who had no
role in the financial crisis and risks encouraging the 250 or so
overseas banks, based in the City, to reconsider their commitment
to the UK – especially as no other country has announced such a
super tax. Sending out a message that the UK does not welcome high
earners will be music to the ears of rival global financial
centres. We need a clear and consistent approach to taxation and
regulation which will ensure the UK remains competitive and
attractive to mobile international business.
"When used appropriately, bonuses provide incentives for meeting
or exceeding targets. They are a flexible tool for management that
can vary according to market conditions and profitability. It is
precisely activities where profits are volatile, that are most
likely to move overseas.
"In most cases, high levels of pay in the financial sector
reflect the high levels of wealth generated by people working in
the industry. The financial services industry contributed 12.1% of
total tax revenues in 2008/09. We cannot afford to lose the taxes –
both in terms of income and spending – that top talent generates
for the government and the wider economy."
Ends
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