Britain is drawing up plans for a tax raid on banks that could help pay the cost of the government's bail-out of the financial system, the Sunday Telegraph newspaper reported. Among the moves being considered by ministers is a one-off windfall tax on profits, the newspaper said. It cited unidentified finance sources who said a similar tax had been imposed in 1981.
Finance minister Alistair Darling is due to outline the government's tax and spending plans in his pre-Budget report within weeks. In his weekly podcast on Saturday, Prime Minister Gordon Brown said the government was taking "extensive action to reform the whole culture of the financial sector". "I'm determined to end the reckless banking practices that have left so many of you worried about your household budgets," he said.
According to the Telegraph, there is "considerable anger" among ministers that, one year after the near-collapse of the financial system, banks are once again heading for huge profits and planning to pay out large bonuses. Big bonuses have been blamed for encouraging excessive risk-taking that exacerbated the global economic downturn.
The Sunday Times reported that Royal Bank of Scotland, which is 70 percent state-owned after it was bailed out last year, is planning to hand out pay and bonuses totalling four billion pounds (4.4 billion euros, 6.5 billion dollars).
An RBS spokesman rejected this, saying that any attempt to put a figure on the payouts for the year was "without any foundation". The Sunday Times also said Barclays, which has not received direct state support, is expected to post record profits of about 10 billion pounds this year "leaving senior executives. in line for multi-million-pound bonuses".
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