Britain should tax bank bonuses and give the proceeds to charities to help cushion them from funding cuts that will hit elderly and disabled people, a leader of the charity sector said on Saturday.
Stephen Bubb, chief executive of the Association of Chief Executives of Voluntary Organisations (ACEVO), representing 2,000 such groups, said charities faced funding cuts of up to ￡5 billion (US$7.74 billion) over the next two to three years.
Local councils are cutting grants to charities as British Prime Minister David Cameron’s coalition slashes spending to curb a budget deficit of about 10 percent of national output.
Separately, the Sunday Telegraph newspaper reported that senior bankers had asked the government for guidance on how, and at what level, year-end bonuses could be paid amid growing confusion about increased layers of regulation.
The bankers, including representatives of Barclays, Royal Bank of Scotland and HSBC, had asked ministers for clear indications of what sort of bonus payments would be acceptable, the newspaper said.
Bonuses of about ￡7 billion are expected to be paid to bankers in Britain over the next two months.
Bubb said charities were proposing a tax on bank bonuses to help charities similar to a one-off bonus tax imposed by the former Labour government last year.
“If there was another one-off tax at 50 pence, that would bring in over ￡3 billion which would go a long way to making up for the cuts that charities are going to be experiencing,” he said.
“Otherwise the cuts ... will hit the old, will hit the vulnerable, disabled people. That’s already happening,” he said.
ACEVO says the proceeds should go to a “Big Society Bank” that the government plans to set up this year to support its goal of expanding the voluntary sector.
The Big Society Bank is to be funded partly with money from dormant bank accounts, but Bubb said ￡60 million from dormant accounts was a “drop in the ocean.”
Bubb, who floated the idea in an interview with the Times, said ACEVO wanted meetings with the British Chancellor of the Exchequer George Osborne and British Deputy Prime Minister Nick Clegg to discuss the proposal.
The bonus issue has divided the eight-month-old coalition, with the smaller Liberal Democrats, led by Clegg, more favorable to tough action than the Conservatives.
The coalition has not imposed a new bank bonus tax, instead imposing a levy on bank balance sheets that will raise ￡2.5 billion a year when fully in place.
Commenting on Bubb’s proposal, the treasury said banks must make their contribution to reducing the budget deficit.
“That’s why the new, permanent bank levy comes into force today. It will raise almost ￡9 billion over the next four years as part of the government’s commitment to extract the maximum sustainable tax revenues from the financial sector,” a treasury spokeswoman said.
Britain fell in line with the rest of the EU last month in introducing tough bank bonus curbs.
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