This morning the government’s plan to phase in a permanent banking levy were altered to bring in the levy in full straight away. It will bring in an extra £800 million as a one-off and, in the words of the Today program is, “Maybe not of a kick, more of a shove perhaps”.
Although attempts to encourage an increase in bank lending are by no means over, the combination of those slow talks and the paying out of large bank bonuses, has not exactly been winning the banking sector friends in government, even amongst Conservative ministers let alone amongst Liberal Democrats.
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18 Comments
This is going be a bit over 10% of this years Bankers bonuses of over £7 Billion ?
They might even have to downgrade their new Ferraris to a Porsche.
We’re all in his together indeed.
On the bright side this might cover the skyrocketing cost of Michael Gove’s Free Schools wheeze.
About time, Milliband had a point about their having an effective tax cut this year. After all the Conservative and Lib Dem (correct in my opinion) complaints during the last parliament about making announcements outside of the commons should this not have been made to the House in the form of a statement?
I don’t think it will increase the banks willingness to lend though. They will just put very high interest rates in place. At present many businesses, including my own, are holding back on investing for growth as the additional funding costs make the risk too high. Stable small businesses trying to do everything out of cash flow will slow growth.
I know this is off-topic, but a little indulgence from the mods would be appreciated.
Will there be an article on LDV regarding Lord Rooker’s amendment passed by the Lords yesterday to the Parliamentary Voting System and Constituencies Bill to the effect that a 40% turnout will be required?
The topic is off enormous importance.
My reaction is simple: if the Lord’s amendment is binding, then Lib Dem MPs (including ministers) should simply vote the whole Bill down and wait five years. It will be utterly impossible to secure 40% turnout, as everyone opposed to changing the electoral system will simply not fill in the referendum ballot. In effect 80% turnout would be required, which we all know is a ridiculous fantasy.
Conservatives in the Lords clearly voted with Labour in order that this amendment would be passed. The whole Bill should fail should this amendment be binding on the Bill. The Conservative’s wish for an upheaval in the distribution of constituencies in order to correct a relatively small imbalance favouring Labour above the Conservatives, whilst Lib Dems wanted a change to the electoral system which might have went some small way to correct the disadvantage under which they campaign which is of an order of magnitude greater. Well those Conservatives who have clamoured for a referendum loaded to fail should learn that perfidy has it’s own reward.
Binding turnout requirement? No Bill. No Liberal Democrat MP should be able to look at himself or herself in the mirror if they accepted such an insult. The government will not fail if the Bill fails, the Conservatives and the nation have and has too much invested in this government eating a succession of rat sandwiches in order to clear up the current fiscal overhang.
Once more apologies for the off-topic post – the mods can always move it to a later article dealing with the amendment if they are so minded.
Meanwhile, if what George Monbiot is saying in the Guardian is correct, we are about to give big multinationals what amounts to a massive cut in corporation tax and an even greater incentive to offshore their activities. How does this square with getting companies to pay their fair share of tax?
h ttp://www.guardian.co.uk/commentisfree/2011/feb/07/tax-city-heist-of-century
10 Conservative’s voted to introduce a threshold. @Paul McKeown
It seems that for all the bluster about Labour Peers it was Cameron’s own footsoldiers who decided to torpedo AV with this wrecking motion. I doubt Mr Clegg will be thinking we’re all in this together this morning.
(I too apologise for being Off Topic but you have to admit this is huge news.)
Paul, why not write one?
Good news about the bigger bank tax.
Bad news about the AV wrecking amendment. Thresholds in referendums are daft as they allow “no” voters to defeat the vote by boycotting it even if they cant defeat it by majority.
@I see no Iceberg – so we’ll be getting £2.5bn from the levy and £3.5bn in income tax from the bonuses? Not a bad haul.
@PaulMcKeown Doesn’t the amnedment just make it non-binding if turnout isn’t above 40%? That doesn’t stop the Government enacting it, surely?
MBoy
“Thresholds in referendums are daft as they allow “no” voters to defeat the vote by boycotting it even if they cant defeat it by majority.”
That’s the point.
@Liberal Neil
A drop in the ocean considering their £20 Billion profits and over £7 Billion bonuses this year.
And the fact that they wrecked the entire economy with the help of Brown.
I think the public noticed that part and will notice again when their bonuses start flooding in.
Osborne was trying to tell us that we couldn’t tax the bankers any more but that clearly isn’t the case.
The question is when everyone else is suffering why should those who caused that suffering not be too ?
I can assure you that everyone I talk to still feels nothing but contempt for the bankers and one of the few things Cameron got right was when he said he wanted to cap bankers bonuses at £2000.
Not that he did it of course, but that would satisfy the public as would a far larger slice of their profits than this,
As Neil said of the £7bn paid in bonuses the Government will take £6.5bn in tax. How much higher would you like to go?
If we want the banks to recapitalise themselves (the reason why there was a Gov bailout/takover) – how do they do that without making a profit?
They are making a £20 Billion profit this year.
Cry me a river.
@I see no Icebreg
And they presumably pay Corporation Tax on that too, as well as employers’ NI for their staff, and now the levy.
I’m not a big fan of the banks, in fact I bank and have my mortgage with mutuals on principle and want to see the banks broken up. However they are businesses that are there to make profit which is then taxed the same as any other business.
Hmm!
The banks are upset – but is all this fuss about the increased levy – a measly £800 million pa increase – just a feint and distraction from the real event? I fear so.
For Osborne is reportedly planning a loophole that will allow banks and other multinationals legally to avoid much UK tax and encourage them to relocate jobs overseas.
http://www.guardian.co.uk/commentisfree/2011/feb/07/tax-city-heist-of-century
That Monbiot article ends with the statement (criticism) that the Government refused to apologise for Bloody Sunday.
This is what Camerson said which looks pretty much like an apology to me.
“Some members of our armed forces acted wrongly. The government is ultimately responsible for the conduct of the armed forces and for that, on behalf of the government, indeed, on behalf of our country, I am deeply sorry.”
Presumbaly this is a small oversight by Monbiot which doesn’t reflect on the accuracy of the rest of his article
@Iceberg
If I take your figure of the banks making £20 billion profit, then where does that leave the Labour/Union plans to tackle the defecit with a Robin Hood tax raising “tens of billions”?
Ah yes of course the banks are ‘upset’. Get real, this is just political theatre to show how ‘tough’ Osborne is while Project Merlin is getting more toothless by the day.
As always look at the share price, the UK based banks share price all rose today.
@Liberal Neil
I don’t think the tax take will be quite as high as you believe.
Firstly, the 7bn in bonuses are paid to individuals with (unfortunately) no end of tax dodges left in the system (thanks for nothing Gordon!!). For example up to £50,000 per year can be put into a pension.
Secondly, the bank avoid corporation tax on the amount of the bonus as it is a legitimate business expense and reduces their profit. Therefore the banks pay 28% of 7bn less tax. Therefore at very best case there will be a net tax from the bonus of 22% not 50%. This will be reduced significantly by the first point. I would expect that the real picture is closer to, if not less than, the corporation tax would be. Otherwise it would be counterproductive to reduce bonuses as the revenue would raise more from individuals.
Thirdly, for the higher earners NI trails off.
It’s still a good move, but but not quite as good as it might at first sight appear.
@Hywel
Sadly you don’t seem to understand how the Robin Hood Tax works.
I suggest you read up on it.
http://en.wikipedia.org/wiki/Robin_Hood_tax
As for whethere Labour will implement it, I have no idea as I don’t support them, but perhaps you could tell us why the Conservatives are implementing a colossal tax loophole for the richest corporations in the world ?
How Nick Clegg could possibly justify this defies understanding.
Apart from the fact that he and Cameron have kept it secret.
And you didn’t understand Monbiot’s article exposing it either.
He was contrasting how the Thatcher regime didn’t apologise, with Cameron’s public relations machine which did apologise, but still gives big business everything they want, and more, by stealth.
All done at the expense of the British taxpayer as usual.
We’re all in this together. If by ‘we’ you mean the wealthiest in society.