Miliband urges banker tax extension

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Ed Miliband has urged the Government to extend the tax on bankers' bonuses

Labour leader Ed Miliband has called on the Government to extend the tax on bankers’ bonuses which raised £3.5 billion last year.

Mr Miliband said it is “unfair” that the banking levy being imposed by the Government this year would raise less than half that sum at a time when ordinary families are facing increases in taxes like VAT.

The Labour leader said extending the tax on bonuses for a second year would provide money to support growth in the economy.

His comments, at his first press conference of 2011, came as the banks prepare to pay out annual bonuses estimated to total as much as £7 billion.

Mr Miliband said: “Last year, Labour’s bonus tax raised £3.5 billion from the banks. This year, the Government’s bank levy will raise just £1.25 billion. It is unfair and it is the wrong economic judgment to be cutting taxes for the banks at a time when everybody else is paying more.

“We believe the extension of the bonus tax for another year is not only fairer, but more responsible. This is because we would use the money raised to support economic growth.”

Prime Minister David Cameron said over the weekend that he wants the banks to “do more to demonstrate their social responsibility”, but said it was wrong to “scapegoat” the sector. He urged the largely state-owned Royal Bank of Scotland to be a “back-marker” in the bonus payouts but insisted he would not attempt to “micro-manage” its activities.

But Deputy Prime Minister Nick Clegg was more forthright in his criticism of financial sector bonuses, which he said seem to come “from a parallel universe”.

Mr Clegg told the BBC Radio 4 Today programme: “I think the key issue of principle is this – for those people running state-owned banks, they have to be sensitive to British taxpayers, who are the shareholders of these state-owned banks, so we are entitled to say that should be reflected in the sensitivity with which bonuses are awarded. The people who run these banks should show extra sensitivity and transparency in the way in which they reward themselves.”

Mr Miliband accused the coalition Government of “deceit” in claiming that the economic crisis was caused by overspending under the previous Labour administration. And he said this incorrect analysis of the causes of the crash had led Mr Cameron and Chancellor George Osborne to take “the wrong judgments about the future” and to construct an economic policy on spending cuts, rather than support for growth.

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