Clegg: Turner’s bank tax is “unworkable”

The BBC tells us:

Lib Dem leader Nick Clegg has queried the “workability” of a suggested tax on banks to curb excessive bonuses. Lord Turner, head of the UK’s finance watchdog, has suggested taxing banks’ financial transactions. The Treasury has urged restraint on bonuses but stressed taxation was a matter for the chancellor. Mr Clegg said the idea had practical pitfalls but agreed with Lord Turner’s “sentiments” and said that some banks needed to be broken up. …

Mr Clegg said there were real questions marks about the “workability” of a UK-only bank tax, given that most banks operated across national borders and in many countries. “It has been debated for many years and it has a lot of practical problems,” he told the BBC. But the Lib Dem leader said he agreed with the “sentiments” expressed by Lord Turner, in a recent interview, that some bank business was not socially productive. “We over-relied on the City of London for too long and it became too big, too unstable and a lot of what the bankers were doing was of little social value to the rest of the UK.”

The rights and wrongs of Nick’s stance are debated over at Darrell Goodliffe’s Moments of Clarity blog, and at Jonathan Calder’s Liberal England blog.

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5 Comments

  • Libdem Guru 28th Aug '09 - 8:16pm

    Well; how does Nick propose to reign in the banks?

    The FSA and UKFI are full of old school tie cronies who defend their own, and are not objective. They have allowed ‘business as usual’ with our money this time, and ridiculous bonuses persist. The banks now know they cannot fail and they will do everything they can to screw the last penny out of the system.

  • Andrew Duffield 28th Aug '09 - 9:59pm

    A Tobin Tax, like all transactional taxes, should be resisted by Liberals. All we need to do to “reign in the banks” is to start collecting the unearned wealth (i.e. economic rent) that they accrue when they create debt-money from nothing. There are 2 ways this could be done – a “Credit Creation Charge” on all bank-created sterling deposits, or by the UK government simply reclaiming its own currency from private hands by having ALL new sterling issued by the Bank of England and loaned to the commercial banks at base rate for onward lending or investment. The revenue raised from either option would potentially allow for the phasing out of taxes on jobs and other beneficial transactions. Bank shareholders would demand curbs on pay and bonuses automatically – and government could borrow direct from its central bank without paying private banks for the privilege. Rather than meddling with rules and restrictions, we should be divesting the banks of their debt-money monopoly position and opening up the private banking cartel to real competition in the process. That’s the Liberal way.

  • Tobin tax all the way.

    Let’s get the people who have ruined our lives!

  • The problem is that they get cheap money loaned by us, re-invest it and walk away with the profit.

  • Tobin taxes are a complete nonsense which is why they have never been introduced. Most of their supporters don’t actually know what the consequences of their introduction (itself almost impossible without a world government) would be. Be careful with your aim when taking revenge…

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