Page last updated at 13:54 GMT, Friday, 15 January 2010

Mayor Boris Johnson says bonuses tax 'threatens London'

Boris Johnson, Mayor of London
Mr Johnson wants global regulation of financial services

Mayor of London Boris Johnson claims around 9,000 bankers may leave the City following a tax on bonuses over £25,000 and a 50p tax rate for top earners.

He has asked to meet the chancellor to tackle "damage done" to perceptions of London as "a global financial centre".

He accused Alistair Darling in a letter of "fast-tracking the departure of this talent pool out of Britain".

The Treasury said it was committed to "ensuring the UK remains a world leader in financial services".

Mr Johnson called for global regulation rather than UK-only measures.

The mayor said leaders of several firms had told him they were rethinking plans to locate, grow or remain in London, including one financial institution where 1,600 staff have requested relocations out of the City and another which is considering moving up to 800.

'Deeply regrettable'

If bankers relocated it would have a knock-on effect on London's legal, accountancy, publishing and media industries and reduce tax resources available to fund public services, he added.

Mr Johnson said: "The bankers helped to plunge Britain into a terrible recession for which we are all paying the price and it was their behaviour that made recent taxes a political inevitability.

"What is deeply regrettable, though, is the unilateral approach taken by the government, which goes far beyond the measures proposed by the EU and G20."

He added: "You have made unilateral changes to taxation that risk damaging London's competitiveness and its status, alongside New York, as the world's leading financial services centre."

A Treasury spokesman said: "London has enduring advantages that we continue to build on, such as our high quality infrastructure, low cost of capital and one of the lowest corporation tax rates among G7 countries.

(The mayor) should spend more time standing up for the hardworking majority and less on the bonus-soaked few
Len Duvall, Labour's leader on the London Assembly

"But along with every other G20 country we are clear that we need a reformed financial system where the taxpayer is last resort not the first."

Labour's leader on the London Assembly, Len Duvall, said London Development Agency chairman Harvey McGrath told a City Hall meeting on Wednesday that he was not aware of any financial institutions relocating from the City.

Mr Duvall added: "Until we see the evidence from Boris, we will take his own adviser's word for it that not a single bank is planning to leave London.

"It's clear whose interests the mayor is representing - he campaigns against taxes for the bankers who funded his campaign while imposing his own fares supertax on anyone who uses the bus.

"He should spend more time standing up for the hardworking majority and less on the bonus-soaked few."

On Thursday US President Barack Obama announced plans for banks and other financial institutions in the US to pay back $117bn (£72bn) to taxpayers.

It led to calls for Prime Minister Gordon Brown to impose similar levies on UK banks.



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