Over at The Independent, Lib Dem deputy leader Vince Cable argues that progressive taxation will not, of itself, neutralise the problem, which has to be dealt with at source. Here’s an excerpt:
I am not surprised to discover that leading accountants are advising high earners in the City how to reduce the tax they pay on their bonuses. That is what tax accountants do. And that is what bankers do. Neither profession is affiliated to the Boy Scouts. It is the Government which needs to explain why tax revenue is disappearing. One major reason is that the 50 per cent top tax rate, in isolation from wider tax reform, was tokenism: waving the red flag rather than cracking the whip. …
Bonuses for trading have provided incentives to take excessive risk which has put financial institutions in danger, and made the taxpayer liable. More sophisticated share price-related bonuses have elevated short-term financial targets above sound long-term investment. The sense has been completely lost of bonuses as rewards for exceptional performance.
The Chancellor is eloquent in his condemnation of the results, but he declines to use the powers that are available to him through government shareholdings in the publicly owned banks or the Government’s wider role, through the Bank of England, as guarantor and lender of last resort to banks in crisis.
He must demonstrate this week that he is willing to act and not continue to behave like someone competing with Pontius Pilate in a handwashing competition.
You can read the article in full HERE.
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