Britain should tax bank bonuses and give the proceeds to charities to help cushion them from funding cuts that will hit elderly and disabled people, a leader of the charity sector said on Saturday, according to Reuters. Stephen Bubb, chief executive of the Association of Chief Executives of Voluntary Organisations (ACEVO), representing 2,000 such groups, said charities faced funding cuts of up to 5 billion pounds ($7.74 billion) over the next two to three years. Local councils are cutting grants to charities as Prime Minister David Cameron's coalition slashes spending to curb a budget deficit of around 10 percent of national output. "We are suggesting that this government needs to put a tax on the most recent bonuses in the City (banking sector) which some commentators are estimating at around 7 billion pounds," Bubb told Reuters. He noted that a one-off tax on bank bonuses introduced by the former Labour government last year raised more than three billion pounds. "So if there was another one-off tax at 50 pence, that would bring in over three billion pounds which would go a long way to making up for the cuts that charities are going to be experiencing," he said. "Otherwise the cuts ... will hit the old, will hit the vulnerable, disabled people. That's already happening," he said. ACEVO wants the proceeds of a one-off bonus tax to go to a "Big Society Bank" that the government plans to set up this year to support its goal of expanding the voluntary sector and encouraging people to take more responsibility for their lives. DROP IN THE OCEAN The Big Society Bank is to be funded with money from dormant bank accounts and private investors, but Bubb said the 60 million pounds from dormant accounts was a "drop in the ocean". Bubb, who floated his idea in an interview with The Times, said ACEVO wanted meetings with finance minister George Osborne and Deputy Prime Minister Nick Clegg to discuss the proposal. The bonus issue has divided the eight-month-old coalition with the smaller Liberal Democrats, led by Clegg, more favourable to tough action than the dominant Conservatives are. The coalition has not imposed a new bank bonus tax, instead imposing a levy on bank balance sheets that will raise 2.5 billion pounds a year when fully in place. Commenting on Bubb's proposal, the Treasury said banks must make their contribution to reducing the budget deficit. "That's why the new, permanent bank levy comes into force today. It will raise almost 9 billion pounds over the next four years as part of the government's commitment to extract the maximum sustainable tax revenues from the financial sector," a Treasury spokeswoman said. Britain fell in line with the rest of the European Union last month in introducing tough bank bonus curbs as politicians and the Bank of England stepped up pressure on lenders to rein in payouts. The British Bankers' Association has said the sector contributes chunky tax revenues to the Treasury and the country's banks should not be put at a competitive disadvantage to rivals outside Europe.
