Friday

29th Mar 2024

Sarkozy and Brown present united front on bank tax

  • Sarkozy(l) and Brown (r) are scheduled to meet on the sidelines of Thursday's summit (Photo: The Council of the European Union)

British Prime Minister Gordon Brown and French President Nicolas Sarkozy have called for a one-off tax on bank bonuses to be implemented "as a priority."

The unified front on bonuses comes as Paris and London attempt to put an end to weeks of diplomatic squabbling between the two capitals, sparked by the appointment of Frenchman Michel Barnier to the EU's internal market post.

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Mr Brown and Mr Sarkozy are also scheduled to meet on the sidelines of a European Summit taking place in Brussels this week (10-11 December), in a further effort to patch up their differences.

Writing together in an article in Thursday's Wall Street Journal, the two men issue a joint call for urgent reform of global financial markets.

They add it is "simply not acceptable" for taxpayers to shoulder the costs of multiple bank bailouts, while not enjoying some of the recent profits earned by the erstwhile struggling financial institutions.

The piece comes just a day after British chancellor of the exchequer Alistair Darling announced a one-off supertax on UK bank bonuses as part of a pre-budget report, provoking howls of disapproval from financiers.

Mr Darling said the UK government would return money from banks to taxpayers by placing a one-off 50 percent tax on all bonuses that exceed £25,000 (€27,500).

A banker earning a £30,000 bonus this Christmas, for example, will pay the windfall tax on the £5,000 portion over the threshold.

The tax will apply not only to workers in British banks, but also to Wall Street and other foreign firms with subsidiaries in the UK, whose reported plans to pay bonuses this year, rivalling those dished out in pre-crisis times, have stunned many.

Not to be outdone, the EU's development commissioner, Belgian Karel De Gucht, independently on Wednesday suggested Europe should introduce a tax for multinationals operating in developing nations but sending profits off to tax havens.

Speaking at an event on good governance in the European Parliament, Mr De Gucht - set to take over the EU's trade portfolio early next year – suggested funds gathered from multinationals in this way should go towards development spending.

Currently tax evasion is "at least three times bigger than development aid," he said.

Agricultural hiccup?

As the French and British leaders prepare to head to Brussels on Thursday, a meeting of 22 EU farm ministers in Paris threatened to rekindle tensions however.

The UK and four other member states that favour a greater liberalisation of the EU's common agriculture policy will not attend the farming seminar, designed to shore up support for generous EU subsidies for the bloc's farmers.

A decision by France not to invite the British minister to the meeting – a fact denied by Downing Street – has been portrayed as a further slap in the face for Mr Brown by the British press.

On Wednesday, French agriculture minister Bruno Le Maire made no bones about his intentions for the meeting. "It's about declaring loud and clear that we are in favour of a strong CAP[ Common Agricultural Policy]," he told French daily Le Monde.

'Swiftly dial back' interest rates, ECB told

Italian central banker Piero Cipollone in his first monetary policy speech since joining the ECB's board in November, said that the bank should be ready to "swiftly dial back our restrictive monetary policy stance."

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