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……..

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

This post was mentioned on Twitter by libcon: :: More calls for windfall tax on banks http://bit.ly/6ksJ2W...

Tankers sitting in the sea waiting for prices to rise.

“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.

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.

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.