UK bank bonus tax a 'one-off' to help restrain markets

London: Britain intends its controversial bank bonus tax to be a one-off and is confident it will help restrain payouts after talks with the industry over the last week, Treasury minister Paul Myners said yesterday.

"From the engagement I've had with the banking industry to date I'm fairly clear that it's not going to require it to be extended further. We've made it very clear it's a one-off tax," Myners said.

Britain last week unveiled a 50 per cent tax for banks on any bonuses over £25,000 (Dh149,389) in an effort to rein in multi-million pound payouts across an industry bailed out by taxpayer cash, which critics say could lead to an exodus of bankers and make London uncompetitive.

However, other countries such as France are considering similar measures.

There have been concerns the tax could be extended if banks try to sidestep the levy, but Myners said: "The purpose is to reinforce the impact of remuneration on risk, and we would evaluate how that develops over the next three or four months."

He said the tax will be targeted at staff involved in "the activities of banking", rather than other operations that may be in a banking group, such as asset management.

Britain's tax authorities would provide further clarity on the scope of the tax, he said, after criticism that draft legislation is so wide it may include other areas of financial services.

Myners said he was aware of the rising cost of greater regulation for financial firms and the government will strike the right balance between the cost and benefit of reform.