European leaders ganged up against fat bonuses to bailed-out bankers Thursday, hoping to create a groundswell of support from around the globe.
British Prime Minister Gordon Brown and French President Nicolas Sarkozy agreed it was a good idea to slap higher taxes on performance pay, particularly as compensation at financial firms is on the rise again.
The proposals also were embraced by German Chancellor Angela Merkel and Luxembourg Prime Minister Jean-Claude Juncker, who chairs the group of nations using the euro and who said most E.U. nations were in favor of using some kind of tax to limit bank bonuses.
“The debate in the international community will move forward,” said Brown after talks with Sarkozy and a joint editorial in the Wall Street Journal, where they said that “a one-off tax in relation to bonuses should be considered a priority.” Brown said the move was bound to find takers around the world.
Brown’s government said Wednesday that it would impose a one-time 50 percent tax on 2009 bonuses above $40,800, and Brown said Sarkozy made a similar commitment.
Merkel described Britain’s tax as an “attractive idea” that might encourage some lessons to be learned in London’s financial district.
“We want banks and their businesses to pay a share, that the burdens of the crises could be shared and not loaded on to taxpayers alone,” she said at a meeting of European center-right leaders in Bonn, Germany.
Last month France’s government issued new rules to all banks operating in the country — foreign banks included — that limited bonuses. The rules will force banks to spread out compensation over several years to ensure pay reflects long-term performance and doesn’t reward risky decisions that soon turn bad. At least half of the bonus will be withheld, to be paid over three years depending on performance.
The bonus amounts and how they are distributed must be published each year.
European Commission President José Manuel Barroso warned that “we cannot have a simple return to business as usual, and that would apply to the bonuses,” his spokeswoman Pia Ahrenkilde.