Page last updated at 15:45 GMT, Sunday, 13 December 2009

Shadow chancellor Osborne 'not against big bonus tax'

Shadow chancellor George Osborne
George Osborne says banks should pay bonuses in shares, not cash

Shadow chancellor George Osborne has said he does not oppose a one-off government tax on bankers' bonuses.

It comes after Conservative London Mayor Boris Johnson warned the tax would "super-penalise" the city.

Mr Osborne told BBC One's Politics Show he would wait to see whether the windfall tax worked in practice and would "judge it by its results".

In his pre-Budget report, Chancellor Alistair Darling announced a one-off 50% tax rate on the larger bonuses.

This would be paid by banks rather than individuals, Mr Darling said last week, and would raise £550m.

At the time, a senior Conservative source told the BBC the party would not oppose the tax - even though they believed there were serious questions about how easy it would be for banks to find ways to avoid it.

He is not opposed to this windfall tax actually, as far as I understand it
George Osborne, shadow chancellor

On Sunday, Mr Osborne told the programme: "I'm not going to oppose it; I'm going to see whether it works in practice and we'll judge it by its results."

He said he had suggested banks pay bonuses in newly-issued shares, instead of cash.

"If people would have taken my advice, we would be in a better place than we are today," he said.

Earlier, Mr Johnson said: "Unless you can come up with a system that penalises all big financial centres, then you're going to end up super-penalising London.

"And that, I'm afraid to say as mayor, I don't think is a good idea," he told BBC One's Andrew Marr Show.

He added that the tax was not a "brilliantly devised measure" and would not raise the sums proposed by the Treasury.

But Mr Osborne denied Mr Johnson was against the tax.

"He is not opposed to this windfall tax, actually, as far as I understand it," he said.

"This is a one-year only tax.

"If you were permanently to impose some additional levy in the UK without trying to achieve some European agreement or more to the point international agreement... then you would be running a serious risk with the competitiveness of the UK."

He added that his number one priority if he became Chancellor would be to try to avoid a 0.5% national insurance increase from 2011-12.



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