The TUC is suggesting, amongst other things, that pay and bonuses over £250k should be subject to corporation tax (currently 28%). It argues that the previous Government’s bonus tax was insufficient because it was too easy to wriggle out of - and subjecting the bonus pool to corporation tax would make it harder to avoid. What's more, because all businesses are subject to corporation tax, it wouldn’t just apply to bankers. Nothing if not egalitarian, the TUC...
Brendan Barber, the organisation’s chief, also said he’d like to see (even) more transparency. So on top of last week’s Project Merlin deal, which stipulated that banks will have to publish the pay of the five highest-earning executives below board level (rising to eight next year), Barber wants to see companies publishing the details of everyone earning over £250k (because it’s about 10 times the average wage). He also suggested there should be a ‘staff representative’ on remuneration committees, and that businesses should start advertising for non-executive directors.
You can see where the TUC is coming from. If the banks' bonuses were taxed at 28%, they'd have a strong incentive to pay smaller bonuses. But it would also hugely add to their tax burden, giving them even more incentive to build their business outside of the UK - and making it harder to stop top talent hot footing it to other international banks without the same constraints. Equally, is it fair to hit all large businesses across the board, just to bash the bankers - and subject them to corporation tax twice?
So while we’re sure the likes of Vince Cable will appreciate some of the ideas (he’s been on the warpath over bonuses again this morning), businesses might not be so receptive. Surely we need to make the UK more attractive as a place to do business, not less - particularly given our current woes?