Don,

sorry to be pedantic, but I think the distinction is worth making: he’s not proposing taxing banks, he’s proposing taxing bankers’ bonuses.

So the question, in my mind, is not whether a windfall tax can be justified but whether it can be designed successfully. All taxes have unintended consequences. One must be particularly careful with this one.

Since the aim of policy is to recapitalise the banks, the tax should not reduce their ability to do so. It would be far better then to impose a tax on contributions made to the bonus pool.

the banks are busy trying to rebuild their balance sheets and are going to be reluctant to make new loans until they’ve done so. We want them to provide credit, we want their balance sheets rebuilt, we don’t want to windfall tax away money that really ought to be accumulating in capital reserves.

hmm. it seems I need to learn how to use blockquote tags

Don’t worry Luis, I always end up writing (blockparty) (/blockparty) and getting nowhere.

Martin Wolf doesn’t have a reputation for being overly sympathetic to finance but its interesting to see how wide support for a measure like this stretches.

Quite Luis. Don seems to have got so all sweaty and excited at seeing “tax” and “bank” in the same article that his eyesight has gone.

“Since the aim of policy is to recapitalise the banks, the tax should not reduce their ability to do so.”

ie, do not tax bank’s profits.

Can we not call for supertax for oil companies too, they ripping the crap off everyone.

Tankers sitting in the sea waiting for prices to rise.

5 – I’d be surprised if the tankers (or their cargoes) were owned by the oil companies.

A windfall tax is altogether too modest a proposal in the context.

What we really need is to apply the Admiral Byng solution to “encourage the others”, as Voltaire put it in Candide.
http://en.wikipedia.org/wiki/John_Byng

Yet again, Laurel and Hardy (Brown and Darling) are too late……banks pay bonuses once per year and most of them have already paid their bonuses for this year. The rest will have paid theirs in the next month or two…all before the end of the tax year. As this is a pre-budget report and not a budget it is almost certain that none of the bonuses earned in respect of last year will be affected. So I get my wonga in full. They know this and this is all for publicity value….and next year the tories will probably be in and have reversed this nonsense in any case

Next year (even before April when the laughable 50% tax kicks in) most of us bankers will have fucked off abroad (me to Hong Kong probably – I already have an offer) and I look forward to blogging to you from there when the UK has lost its AAA rating, suffered a Gilts crisis and had to go cap in hand to the IMF as the last Labour government ended its days also……..