David Cameron’s bank tax threat on ‘galling’ bonuses

By Daniel Bentley
Saturday, 18 December 2010

David Cameron

David Cameron has threatened the banks with higher taxes if they failed to rein in lavish bonuses.

The Prime Minister signalled a new focus on banking sector tax revenues, saying that unpopular decisions on bonuses would make it difficult to keep a regime “that they might favour”.

His comments backed Deputy Prime Minister Nick Clegg's warning that the Government would not stand on the sidelines if banks refused to restrain their pay levels.

Mr Cameron insisted the banks had to understand the “political context” to the issue of bonuses, given that the banks were bailed out by taxpayers who are now feeling the pinch.

The British public found it “very galling” to see bankers paying themselves “unjustified bonuses”, he said.

Mr Cameron’s remarks provoked hostility from the City and some scepticism as to what action the Government could take unilaterally to curb banking sector excess.