Goldman Sachs Group Inc. (GS) announced that it expects to move as many as 1,000 of its staff from its UK operations to Spain. The bank claimed that the sudden and retrospective tax on bonuses has damaged its confidence in the UK tax system.

Goldman’s confidence has been dented by the 50% super-tax on all bonus payments above £25,000, the increase in the rate of income tax from 40% to 50% and banker-bashing comments by regulators. This new tax regime was announced by the U.K. government earlier this month. The move comes as Britain’s Labor Party faces an election next year and is aiming to tap public anger over what is popularly perceived as the bankers’ culture of excessive pay.

This move by the UK has encouraged France, which also intends to include similar one-off taxes in its Budget Bill ongoing in Parliament. In the U.S., there is little indication that politicians will follow the UK’s lead. The Congress briefly considered imposing a special tax on bonuses earlier this year amid a pay flap at government-controlled insurer American International Group Inc. (AIG). But Congress dropped the idea after the payout furor receded.

Bankers protest the increase in tax and associated comments are driving talent away, potentially crippling an industry that the London claims contributes a tenth of the total UK tax receipts – £61.4 billion. According to the Association for Financial Markets in Europe, approximately 80% of the business conducted by financial services firms in the UK comprises services offered to foreign residents, rendering the companies open to relocation to other jurisdictions.

London is the hub of European activities for Goldman Sachs, which is a powerful force in investment banking and securities in the U.K. The bank is expected to pay £1.4 billion in pay and bonuses this year. The bank’s decision to move will affect six of its executives in London. Other banks considering moving staff are BNP Paribas, HSBC Plc (HBC) and JPMorgan Chase (JPM).

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