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UK bankers lobby Chancellor to drop 50% bonus tax

Some of the U.K.'s most senior bankers have joined forces to lobby the UK government into dropping the proposed 50% bonus tax in exchange for a combined contribution, on a voluntary basis, of £2 billion from the UK financial sector. This is set to cause some problems for the UK government as the proposed bonus tax is forecast to bring in around £550 million in its one-off year against a proposed £2 billion voluntary contribution.

The group of senior executives in the city who are lobbying the Chancellor believe that the government can withdraw the 50% bonus tax and still claim to have "taught the sector a lesson" by bringing in around £2 billion for the government coffers. The reason why senior bankers are lobbying the government is purely and simply because a 50% bonus tax could do more damage to the long-term reputation of the London markets compared to a £2 billion one-off payment to the government.

It will be interesting to see how the UK government reacts to this voluntary proposal and whether we will hear any comments before the next election. Many people believe that the 50% bonus tax is nothing more than a political pawn as we approach the election but the government is adamant it is a way to make the UK banking sector "pay".

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