City up in arms over academics' calls for a windfall tax on banking bonuses

LEADING City figures yesterday slammed the idea of a windfall tax on bonuses floated by a group of university professors, labelling it &ldquo;gratuitous&rdquo;, &ldquo;impossible&rdquo; and &ldquo;absurd&rdquo;.<br /><br />The 14 business school academics, writing in a letter to The Guardian newspaper, said money raised should be injected into public services, to reimburse taxpayers for the billions used to bail out the banks in the current economic crisis.<br /><br />But the City was enraged by the idea, claiming it would unnecessarily penalise the sector and drive away talent to other jurisdictions.<br /><br />&ldquo;We already pay higher tax on bonuses than in most other countries,&rdquo; said Angela Knight, chief executive of the British Bankers&rsquo; Association. <br /><br />Jon Terry, head of reward at PricewaterhouseCoopers, said it would be impossible to make the tax equitable. &ldquo;We need to introduce a remuneration system that is fair and sustainable,&rdquo; he said.<br /><br />Tim Linacre, chief executive of stockbroker Panmure Gordon, added: &ldquo;The City is still one of the few UK success stories and will be one of the few engines for growth in the future. Absurd, politically motivated tax grabs can only damage the economy.&rdquo;<br /><br />Liberal Democrat Treasury spokesman Vince Cable said the new 50 per cent tax bracket was already effectively a tax on bonuses, making the idea of a windfall tax &ldquo;gratuitous&rdquo;.