Thatcher: Tax the bankers!
“I shall never forget the weeks leading up to the budget. Hardly a day seemed to go by without the financial scene deteriorating in some way. The question now was whether to levy a windfall tax on bank profits. Naturally, the banks strongly opposed this; but the fact remained that they had made their large profits as a result of our policy of high interest rates rather than because of increased efficiency or better service to the customers."
So wrote Margaret Thatcher on her and chancellor Geoffrey Howe’s decsiion to er, tax the bankers. Back in ’81, the supreme monetarist that was Howe, was happy to do the deed, as was his boss. But circa, December 2009, Angela Knight from the British Bankers' Association called such taxes on banks "populist, political and penal".
She said such windfall taxes on bonuses would send the wrong message to the rest of the world about the UK's position as a banking centre.
"We have already seen quite a few companies shift out of the UK," the BBA's chief executive told the BBC. "It might be popular to put very high taxes on a few [bankers], but we need to know how we would look internationally."
Well... apart from some non-doms not paying UK tax, the vast majority of the world’s taxpayers enraged at bail-outs compounded by bonuses, might look on it rather favourably.
Read more of Mrs T and managing the banks at margaretthatcher.org
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The Bottom Line:If Mr Cable has his way...
"If Mr Cable had his way, all the big banks would be broken up and bonuses would be virtually eliminated - a sure-fire way in my view of guaranteeing an end to the UK’s ability to compete as an international financial centre. Let’s not forget that this is a man who is on record as saying that everyone who works in a bank has an ‘aristocratic lifestyle’ clearly demonstrating his lack of understanding of the sector." A tough line on bankers’ bonuses could make a brain drain of financial talent a distinct possibility, warns Paul Marsden. Read more