Tory MP Mark Garnier has warned that a cap on bankers’ bonuses will be ineffective.
On Wednesday night EU politicians passed a passed the bonus cap in Parliament, capping bankers’ bonuses at a maximum of twice their base salaries, starting in 2014.
Speaking at an ACCA meeting, Mark Garnier warned: “Banks are going to get around [the cap], of course they’re going to get around it.”
He suggests that banks could circumvent the EU banker bonus cap through buying houses from bankers, stating:
“You can go to a banker and say you’ve got your house in Holland Park or Maylebone for £3m, we’ll buy it off you for £5m and actually that’ll be a tax-free bonus because it’s your principal place of residence and you avoid it.
“People will always game the system and it’s up to HMRC to try and deal with it.”
He also points out this Daily Telegraph cartoon as a possible way bankers can easily get round the cap: