France 'considering tax on bank bonuses'

France could follow Britain’s lead by slapping a special tax on bank bonuses for 2009 but has yet to agree a rate, government sources said.

No official comment was immediately available from the office of French President Nicolas Sarkozy or the Finance Ministry. The French Banking Federation declined to comment.

Three French government sources said officials were examining technical details of a levy, carrying on from a speech by Sarkozy ahead of a meeting of Group of 20 countries in September.

“We’re still working on the ways and means,” he said. “The British have set a level of 50%.
We need to do technical work to see what the impact would be. It’s too early to say it would be such-and-such a percent,” one official said.

“In any case, it shouldn’t be much of a surprise. The president said in his speech on August 25 that all G20 countries should implement a policy on bonuses. This is part of that.”

Les Echos newspaper said the tax would apply to bankers who receive bonuses of more than $39 710 and would be set at 50%.

Earlier on Thursday, the Wall Street Journal published an article by Sarkozy and British Prime Minister Gordon Brown calling for an exceptional tax on global bank bonuses..

British Finance Minister Alistair Darling on Wednesday said banks operating in Britain would be charged a 50% tax rate on staff bonuses of above £25 000.

Bankers in London’s influential City financial district criticised the plan, while a leading Paris-based investment banker said ways would be found to avoid it.

“The banks and hedge funds can just increase the basic salary or pay out the bonuses off-shore. It does not make much economic sense as it won’t bring in much money to the state,” said Saxo Banque France head Pierre-Antoine Dusoulier.

France’s top banks are BNP Paribas, Credit Agricole, Societe Generale, BPCE and Credit Mutuel.—Reuters

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