Merkel praises Darling's executive bonus tax

The German chancellor Angela Merkel has praised Alistair Darling for his pre-Budget report proposal to tax the bonuses of banking executives.

The leader of the European country's coalition government has offered an indication that she may follow the example of the British chancellor in introducing a one-off 50 per cent tax on any individual bonus above £25,000.

This proposal was unveiled by Darling in his pre-Budget report on Wednesday (December 9th) and is considered a method of reducing the burden of the economic crisis on the taxpayer.

Merkel explained that Germany had already begun to control the remuneration structures of banking executives - with bonuses required to be paid over a period of several years.

Commenting on the British proposal, she said: "I think the idea that arose in the City of London ... to have a one-off tax on managers' bonuses is a charming idea that maybe will produce a learning effect."

Last week, directors of RBS claimed that rewarding executives with bonuses can benefit shareholders by attracting the industry's top talent to organisations.