Switzerland unveils plan to tax banks for big bonuses
The Swiss government on Wednesday unveiled plans to tax big staff bonuses paid out by bank and insurance firms in an attempt to rein in "excesses" in the financial services industry.
The cabinet, the Federal Council, said in a statement it wanted to tax companies in the industry for the variable component of pay that exceeded 2.0 million Swiss francs (1.4 million euros. 1.9 million dollars) per employee.
Swiss Finance Minister Hans Rudolf Merz said after a cabinet meeting that criticism of bonuses in the financial industry was justified.
"It's important to find the right balance," he added.
The bonus tax proposal was part of a three-fold plan on financial services pay announced on Wednesday.
It came amid renewed political discontent over salaries at big Swiss banks despite pledges of restraint in the wake of the financial crisis.
"With these measures, the Federal Council is sending a signal against excessive compensation in the financial sector, which is objectionable particularly in the case of loss-making companies," the government said.
"Inappropriate compensation systems with false incentives were jointly responsible for excessive risk taking, which led to the financial market crisis," it added, targeting "compensation excesses of the financial sector>"
"Variable salary payments that depend on company profits should be taxed as profit distribution in future," rather than treated as personnel expenses for tax purposes.
Major banks argue that they need significant bonuses to keep competitive and attract the best senior staff at international level.
The proposals also included draft legislation to ensure government regulation of pay in financial firms that receive state support as well as new rules to tax employee stock options when they are cashed in rather than when they are granted.
© 2010 AFP