An expensive piece of spin

Labour briefed out its plan to tax banks that pay bonuses so extensively that everyone in the City knew it was coming. The result is that a slew of banks paid their bonuses out early.

Small, private banks that aren’t encumbered by bureaucracy moved to award their bonuses early as soon as these stories started appearing in the papers. The legislation says that the moment when the tax is awarded is when the tax applies, so if a bank awarded its bonuses as late as Monday — when the details of this plan were all over the papers — they avoided the charge. As one City accountant who works with these banks told me, ‘If anyone didn’t do it, they’re a bit silly.’

If the purdah that used to be observed before all Budget statements had been observed, the banks would not have had the opportunity to do this. This spin operation looks like it will cost the taxpayer money.