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Tax On Bankers' Bonuses: Swiss President Unconvinced

by Ulrika Lomas, Tax-News.com, Brussels

17 December 2009


Describing the idea, championed by France and the UK, of imposing a windfall tax on bankers’ bonuses as a “reasonable” one, Swiss President Hans-Rudolf Merz nevertheless revealed that it is simply not a feasible proposal, given the numerous means by which banks would be able to bypass the tax.

Instead of issuing bonuses, he added, banks could, for example, change the way in which wages are set up.

Other alternatives to offering banking bonuses include increasing the basic salary of staff, and granting indirect payments to employees, such as perks, fringe benefits, or gifts, he continued.

Given the many different means by which banks would be able to avoid the tax levied on bonuses, the only real solution is to treat income as income and to tax accordingly, as is the case in Switzerland, Merz explained.

Indeed, bonuses already form part of an employee’s income, and as such are already subject to tax, he emphasized. Any employee receiving a large bonus will have a higher income and will consequently be required to pay a larger amount of tax, he concluded.


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