our parliamentary correspondent, Accountancy Age, Tuesday 21 September 2010 at 13:47:00

Deputy prime minister Nick Clegg threatens another tax on bonuses if bankersreturn to awarding excessive payouts


Liberal Democrat leader Nick Clegg threatened a second emergency tax on bankbonuses if bankers award themselves "unjustified" payouts in the approachingbonus season.

He issued the threat after delivering a keynote speech to his party'sLiverpool conference announcing a crackdown on tax avoidance and evasionintended to net £7 billion.

It followed a speech in which Chief Treasury Secretary Danny Alexander said£900 million would be spent by HMRC in a drive to recover the money.

The deputy prime minister was speaking on BBC Radio 4 interview beforejetting off to attend a UN international aid conference in New York.

Clegg said: "If the banks pay themselves unjustified bonuses, we reserve theright to take very serious action on that.?

He said this "would not be in their interests at all, socially oreconomically", adding: "It is very important that the banks understand that youcannot possibly award yourself ludicrous sky-high bonuses in an industry thathas been bailed out by the taxpayer when those same taxpayers are now having tomake very serious sacrifices in their own lives...

?If you abuse the generosity of taxpayers who have provided, both directlyand indirectly, a massive infusion of public funds to bail you out by awardingyourselves bonuses that will appear almost gratuitously offensive at a time whenpeople are having sacrifices in terms of their pay and pensions, then clearlythis Government will not be able to stand idly by.?

He said no options were ruled out, including a further levy.

Clegg's remarks follow a warning from Business Secretary Vince Cable thatdefiant bankers would be heading for a "train crash" and face an "enormous kickback from leading politicians would be "on the war path".

The government is considering whether it would be possible and advisable tosplit traditional high street banking operations from merchant banking.

Clegg also defended plans to increase revenue from green taxes, principallyon petrol and other fuel but insisted the increases would be balanced by cuts inincome tax.