Panicking City of London financiers begged Chancellor Alistair Darling not to indulge in banker-bashing last night amid signs he is planning a one-off raid on bonuses.
A report from leading accountants PricewaterhouseCoopers, commissioned by the City Corporation, claimed financial services contributed £61.4billion or 12.1% of the Treasury’s total tax take, and the corporation warned a crackdown would damage the industry’s ability to attract the brightest and best and keep business flowing in.
The appeal was launched as Mr Darling was putting the final touches to his delayed pre-Budget report. In it he is likely to admit economic performance has been worse than thought and public borrowing will rise even higher than the previous estimate of £175billion.
He will spell out how the government intends to meet the commitment in its Fiscal Responsibility Bill of halving the debt within four years.
Personal allowances are expected to be frozen, bringing thousands more into the top rate of tax, and some analysts believe that he could even signal future rises in VAT.
Ministers hope these bitter pills are sweetened by a one-off tax on bankers’ telephone number bonuses on top of the new 50% band for earnings over £150,000 due in April.
Meanwhile Scottish Finance Secretary John Swinney repeated his call for help to get the economy out of recession with an advance on Scotland’s capital allocation from next year.
A spokesman for Mr Swinney claimed widespread agreement in Holyrood that Scotland needs the capital boost to support the process of recovery, including the support of Scottish Labour leader Iain Gray. For the chancellor not to act “would be a dereliction of duty”, he said.
Aberdeen North SNP MSP Brian Adam demanded Mr Darling heed the pleas of the offshore oil and gas industry for tax breaks to encourage more investment.
He supported Aberdeen and Grampian Chamber of Commerce’s plea for a better tax environment for exploration and development .
The AA joined in with a plea to resist the temptation to speed up the expected rise of 1p-a-litre duty on fuel at the pumps due in April.
The Institute of Directors called for a pay freeze across the public sector, the reform of public-sector pensions and the scrapping of planned increases in National Insurance and top-rate income tax.
TUC general secretary Brendan Barber said: “A windfall tax on bank bonuses should just be the start of building a fair tax system and reforming finance.”
A million public sector jobs, including frontline roles in the NHS and the police, must be axed if the government is to cut its deficit, a think-tank said yesterday.
Reform said that reducing the headcount by 15% would eventually save around £27billion a year.