Chancellor's bonus 'supertax' seems doomed to failure says Cable

3.51.00pm GMT Fri 8th Jan 2010

Reports are emerging that Alistair Darling's bonus 'supertax' has failed, since many institutions are planning to absorb the charge rather than reduce bonuses. "The best way to deal with bonuses and achieve a fair deal for the taxpayer, who guarantee these institutions, is for the banks to pay a 10% levy on their profits," says the Liberal Democrat Shadow Chancellor Vince Cable MP.

"When even the Chancellor's closest allies are admitting that this tax will have no effect on the culture of bonus payouts, it would seem that this initiative is doomed to failure.

"A 10% profits levy is a much more effective solution than a one off windfall tax and recognises the debt that the banks owe to the taxpayer."