UK government criticised for tax cut as firms defer bonuses
LONDON Aug 20 (Reuters) - Britain's government has come under fire for abolishing a tax on top earners after data released on Tuesday showed companies delayed paying employees 1.7 billion pounds ($2.66 billion) in bonuses until the tax cut took effect.
Bonuses are traditionally paid between December and March, the so-called "bonus season", but an Office of National Statistics (ONS) report revealed that a number of companies deferred payouts until April, after the top income tax rate was reduced from 50 percent to 45 percent.
Bonuses paid to Britain's workers were 2.9 billion pounds in April 2013 compared to 1.9 billion pounds in April 2012, according to the ONS. In the finance and insurance industry, which pays more than a third of all bonuses, bonuses in April totalled 1.3 billion pounds, more than double the figure a year earlier.
The data show almost 30 percent of companies in the finance and insurance sector deferred bonus payments until April.
Chris Leslie, from the opposition Labour party which introduced the tax in 2010 and the shadow financial secretary to the Treasury, said on Tuesday the data showed the government was putting the richest before ordinary Britons.
"While ordinary families on low and middle incomes are seeing their living standards fall, those at the top are reaping the benefits of David Cameron's tax cut for millionaires," he said in a statement, adding that millions of pounds of revenue will have been lost as a result.
The issue of bankers' bonuses has triggered public anger in Britain, where despite signs of an economic recovery, ordinary citizens' incomes remain stuck at some of their lowest levels in a decade.
In January, U.S. investment bank Goldman Sachs scrapped plans to delay paying bonuses to its Britain-based bankers after the then Bank of England Governor Mervyn King criticised the idea.
A spokesman for The Robin Hood Tax Campaign, which is lobbying for financial transaction taxes to help the government fund welfare programmes and reduce poverty, attacked the government's tax cut on top earners.
"The Government's manipulation of the tax code to benefit the super-rich has made a bad situation worse. It should put substance to its phrase that 'we are all in this together' and ensure the City pays its dues," a statement said.
A spokeswoman for the Treasury said the bonus figures were in line with forecasts in finance minister George Osborne's budget and said bankers' bonuses were well below their peak before the financial crisis.
The ONS figures show bonuses across the UK economy stood at 37 billion pounds in the 2012/2013 financial year (April to March), up 1 percent from the year earlier. Workers in finance and insurance got the largest bonuses, taking home on average an 11,900 pound bonus, nearly twice the next highest payment of 6,700 pounds paid to those working in mining and quarrying.
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