Johnson’s policy director, Anthony Browne, is adamant that phone lines were humming before Christmas with calls from bankers upset at a 50p tax on incomes of more than £150,000, the withdrawal of tax relief on pensions for the same income group and the windfall tax on bonuses. Based on questions put to the callers about their plans, the mayor estimates the figure of 9,000 is reasonable and could cost the exchequer more than £1.2bn in lost tax and national insurance contributions.
Browne says: “Of course we don’t know if they will carry out their threat, but they are very upset. As well as the level of tax, it is also the uncertainty that prevents them from planning, which is a big issue.”
He warned that Switzerland was mentioned many times by callers as an alternative base for some or all of their business.
Geneva was often spoken of as a preferred location. Swiss cantons with lower tax rates and spare property are catching up. Pfaffikon is an area with around 10,000 inhabitants that enjoys an income tax rate of 18%. It has already grabbed headlines following an influx of little- known, but extremely profitable firms, including Quaesta Capital, Aeris Capital and Westport Private Equity, along with a major offshoot of FTSE 100 hedge fund Man Group, which is the area’s largest employer with 500 staff.
A drift of small private equity houses and hedge funds is unlikely to worry the Treasury. But even threats from bigger players such as Goldman Sachs are unlikely to cause panic. It is understood the US investment bank is considering shifting some departments overseas.According to reports, the bank asked an internal team to examine various strategies, including whole divisions being moved abroad. While Goldman’s proprietary trading arm, foreign exchange trading teams and the bank’s back office operations were all mentioned as areas that could be examined, the bank’s main centre will remain in London.