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UK government set to attack banking sector again

The UK government is today on a collision course with UK banking chiefs with news of a potential 60% tax rate aimed at those earning in excess of £500,000 a year. Banking chiefs have reacted with dismay to the suggestion in today's press, countering the proposals by confirming that the UK financial sector brings in around £7 billion a year in corporation tax.

It seems that the UK banking sector is a very easy target for the authorities at the moment and there are concerns that the banking sector is being portrayed as the devil in disguise. It will be interesting to see whether Alistair Darling has the nerve to go through with his potential super tax rate because this could push many financial companies offshore and reduce what has been a massive income stream for the UK government in past years.

Coming at a time when the UK financial markets are already under pressure from EU regulatory changes this could not have come at a worse time and there are many in the City that believe Alistair Darling will not go through with this particular idea. However, if he does decide to introduce yet another tax band we can expect a flurry of UK-based financial institutions to look at the potential benefits of moving overseas.

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