Tuesday 18 December 2007

Credit Crisis and Economic Downturn Looms but it's Another Good Year for City Bonuses.

The financial press daily report on the mounting credit crisis and every serious economic commentator is predicting a downturn if not yet a full blown crash, but it's another good year for city bonuses. So far the predictions are that over £7.5 billion will be paid out in bonuses over the next few days in the City of London.

Bankers at Goldman Sachs are giving themselves at least £5 million each from a record bonus pool worldwide of £9 billion. They will joined in the bonus bonanza by Barclays Capital,DresdenerKleinwort, Lehman Brothers, UBS and Morgan Stanley.

So the people and institutions who have brought us to the brink of recession are rewarding themselves by becoming even more filthy rich.

The City of London plays a significant role in assisting individuals and companies avoid tax on their income. The IMF has recently described the City of London as an onshore tax haven. Latest estimates put the figure of tax lost by tax avoidance in Britain at £150 million every year. It is estimated that Africa loses £75 billion through tax dodges, five times what it receives in aid.

Today I have tabled an Early Day Motion in Parliament calling on the Prime Minister to introduce measures to tackle this tax avoidance and also to introduce a windfall tax on the city bonuses. Even a small redistribution of the income from these grotesque bonuses would assist in eradicating child poverty in our society.

Will Gordon Brown act to tackle this obscene increase in the wealth of the very rich at a time when many in our society face the insecurities of a possible recession? After ten years of a Labour Government we shouldn't have to ask the question.