Bonus supertax 'could drive executives away'

The Treasury's decision to introduce a one-off 'supertax' on bonuses in the banking sector could discourage top executives from working in the UK, it has been claimed.

According to the Financial Times, many experts fear that the levy could severely damage London's status as a financial centre, while allowing other locations such as New York and Hong Kong to forge ahead in terms of executive recruitment.

John Griffith Jones, the British chairman of KPMG in Europe, described the supertax as "a cheap shot".

He told the newspaper: "While I recognise everyone has to pay their share, portraying it as us and them may damage the reputation and fabric of the City."

In last week's pre-Budget report, chancellor Alistair Darling announced that the 50 per cent tax rate will apply to all discretionary bonuses above £25,000 in the banking sector.

Meanwhile, mayor of London Boris Johnson has claimed that a tax on bankers' bonuses should apply to all major financial hubs, rather than "super-penalising" the capital.

He told the BBC: "You could have come up with a solution that brought together New York, Paris, Frankfurt, all the financial centres."