FEPS Fresh Thinking

The decision last night of the European Union to cap the bankers’ bonuses is a true step in the right direction to regulate the financial markets. Today’s harsh reaction of the City of London shows clearly how necessary this decision was and how outraged these so-called elite-bankers are.

This strong opposition has also been supported by David Cameron and Boris Johnson who are concerned that capping bonuses at a basic salary will scare banks away from London (Guardian 28 Feb 2013a).

It is no longer acceptable that banks report huge losses whilst at the same time dish out very generous bonuses. For instance, in 2012 Royal Bank of Scotland reported losses of more that £5bn after paying out more than £600m in bonuses (Guardian 28 Feb 2013b).

We should recall ourselves that the bankers gambled the world and Europe into the deep crisis to which the severe consequences we are witnessing for several years now. The tax-payers had to procure the money to rescue most of the banks from bankruptcy and only now it is the first time that they will be requested to accept some responsibility towards society. This has been a long in waiting.

After the decision of the financial transaction tax and now the cap of the bonuses we are a step closer to the matter that the financial markets have to serve the people and not that the people should serve the markets.

However the battle is not yet won and the next issue is tax evasion and tax fraud. An estimated 1 trillion € in public money is lost to tax fraud and tax avoidance every year in the EU. This represents roughly yearly costs of 2000€ for each and every European citizen. See Mojca KLEVA KEKUS written contribution to FEPS Renaissance for Europe event in Turin.

Let us imagine that if the money collected from financial transaction taxes, unpaid bankers’ bonuses and tax fraud and evasion is put together on the table it could be spent much more wisely. For instance, investing in education, research and innovation would create jobs and growth and foster our European social security systems.

European citizens would be in a much better social and financial situation. We would also have lower risk in countries such as Italy where populists are winning elections and putting Europe even deeper in crisis.

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  1. Well said Sir.

    Just so that you are very correctly aware of the situation in the so-called city of London about salaries and taxes paid.

    We have got several friends in London that are “gamblers” with people’s and companies’ money and they are given huge salaries — generally over £250,000 per year — and lucrative Expense Accounts — and in addition because they are all registered as Limited Personal Liability Companies they pay hardly any Taxes on their basic salaries or their expensive life-styles as a result.

    Just look at the expensive Flats in the whole area around Canary Wharf and then watch these people leave them as they depart every weekend.

    Furthermore since most of these Gamblers are registered as being “Resident Overseas” that is outside of the UK for more than 6 months variously residing in Switzerland Monaco or any other place you may think that offers such lucrative taxation benefits, they do not pay any taxes in the UK at all.

    This is the TAX EVASION and TAX FRAUDULENT ISSUE that you presumably are aware of and which the various Governments in the EU are equally as also very aware. It beholds no-one — and importantly the Mr and Mrs Average Tax Payer — to think that these are the SPOOFS and CHANCERS that have brought the World almost to ruin over the past few years. Share Prices go up, they win!—Share Prices go down, they win! Insider dealings all the time and no one does anything about it!

    Now it is about time that something is done. No we do not expect bonuses to be limited to a “One Year’s Salary”, we expect them to be limited to reward failure as well. How come that the Royal Bank of Scotland which made a Loss of £5,170,000,000 still paid out £800,000,000 bonuses? This is nonsense since the bonuses only add to the overall loss. When you compare this to the issues about MPs salaries in the UK Parliament and the comments made about salaries for an MP being less than £100,000-00 per year and expenses – which by and large are fully vetted – it makes the whole issue look completely fraudulent for these Gamblers.

    But we should not stop there. Look at any other major Institution in the UK — take the BBC for example. Why should the spoofs that run the various programmes get paid £10 Million a year to do so. The presenter for Top Gear is paid £10 Million a year, and we hear pays no Taxes! Come on how many more are there? No wonder the issue is that this style of Corporation is being viewed at heavily. It is nonsense to have an unaccountable body that takes £7 Billion of Tax Payers money to be totally unaccountable for its Salaries and expenses. Most of these people are Registered a Limited Liability Companies and again pay no Income Tax. This is not on, and if this was dealt with I am sure there would be much more acceptance of the times.

    The time has come for the Tax Payers to rebel.

  2. There seems to be a reluctance by politicians in some countries to want to do something about fraud and tax evasion . As people have said before , rich politicians may feel themselves targetted .

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