High levels of bank bonuses are benefiting the Treasury, a leading Tory ex-Cabinet minister has claimed.
Lord Forsyth of Drumlean, who works for investment banking advisers Evercore Partners and has previously chaired a Tory tax commission, claimed bonuses were good for the nation’s coffers.
He said at question time: “Every pound that is paid in bonuses there will be 50% tax paid, there will be 12% national insurance paid by the employer plus 2% paid by the employee so 63%, I think that’s the right number, comes back to the Exchequer at a time when they need revenue.
“If the money is not being paid in bonuses then presumably it can be offset against losses and the Exchequer will receive nothing.”
His comments came as Treasury minister Lord Sassoon defended the Government’s position over bonuses at the Royal Bank of Scotland, which is predominantly state owned.
The minister told Lord Forsyth: “Those numbers are correct about the marginal rate of tax. That is not the only tax we extract from the banks, far from it.
“This Government has put in place a bank levy which will, when it comes into full force, raise an additional £2.5 billion out of the banking sector, a larger amount than taken from the banks in the previous government’s banking tax.”
But Labour’s Lord Hoyle, a former Warrington MP, demanded: “Isn’t there something lacking when we cannot take firmer and more positive action in a bank where we have 83% of the share holding?
“Does it not give the green light to the banks to carry on in the same way? At the same time innocent people are losing their jobs because of the folly of the bankers who seems to be very close friends of this Government.
“The Government has talked tough and have acted weak. Is there not a smell of hypocrisy about them?”