Anthony Browne urged chancellor George Osborne to consider 'severe fiscal consequences' of anti-industry feeling
One of Boris Johnson's key aides has warned that banker bashing "is not a joyful, cost-free pastime" and could put the country at risk of losing �20bn in tax revenue.
Anthony Browne, who serves as the Conservative mayor's adviser for economic development, urged chancellor George Osborne to consider the "severe fiscal consequences" of "high personal taxes and anti-industry feeling".
Johnson has been seen as a staunch defender of the financial sector, arguing that it is crucial to the health of the London economy, although he has urged banks to apply restraint on bonuses.
Writing in the free London newspaper, City AM, Browne said the government should pay "close attention" to figures cited in a recent report from PriceWaterhouseCooper, which showed that financial services contributed �53bn in taxes last year ? equivalent to nearly �3,000 for every UK household.
"Break down the headline figure, and it shows just how vulnerable the tax collector is to banker bashing," wrote Browne.
"A detailed analysis by the consultants Oliver Wyman for TheCityUK, which represents financial services, shows that about 40% of the total tax contributions comes from international financial services that happen to be carried out in London, but are quite mobile.
"That's roughly �20bn of taxes from activities that could move overseas ? as much as the government pays on roads, rail and buses combined."
Browne, a former journalist who earns �142,000 for his city hall role, seized on Osborne's bank levy, which was raised two weeks ago to extract more cash from banks. "With higher taxes in London, firms are increasingly looking to book their trade (and so pay their taxes) through other more friendly centres," said Browne. "The banking levy will affect the location of balance-sheet heavy global trading businesses."
The Tory mayor warned before the general election last year of the possible impact on banks of high taxes, notably a supertax on bonuses, claiming it would prompt bank staff to relocate elsewhere in droves, at a cost to the treasury.
In his City AM piece, Browne said that while there was never any prospect of big banks moving "lock stock and barrel", tax revenues were still likely to be "heavily affected" by how internationally competitive the capital remains.
The could UK lose around �14bn-�16bn in employment taxes from a small number of "mobile high earners", he said. Browne added: "It is clear that banker bashing is not a joyful cost free pastime, producing pleasing hisses. It has severe fiscal consequences."
Source: http://www.guardian.co.uk/politics/2011/feb/24/banker-bashing-cost-uk-economy
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