The man with the award-winning eyebrows has let it be known that he is going to make another U-turn:
Alistair Darling is drawing up plans to face down the country’s top bankers by taking the “nuclear option” of a windfall tax on their bumper bonuses as part of measures aimed at the super-rich.
The dramatic move, which was off the agenda just weeks ago, is under active discussion as the Treasury and No 10 try desperately to control the explosion of public anger over bankers’ pay.
Government sources said Darling was keen to explore the option for introducing a windfall tax if practical problems – such as defining what constitutes a bonus – could be overcome.
[Ed: Emphasis is mine.]
There are several issues at stake here.
Firstly, this is just a knee-jerk reaction to something that was already sensibly rejected the first time around. This is never a good basis for policy making. The fact that they can’t even say off the top of their heads what a bonus is just emphasises how badly this is going to fail. (And this isn’t a fatuous concern, I have some passing contact with the labyrinthine world of employment contracts and Mr Darling’s concern over identifying what a bonus is, is not a trivial one.)
Secondly, it’s a very clear targeting of a small number of people. What is next, are we going to make bankers wear a badge so that we can identify them on the street and vilify them and smash their windows in? Will we be going after financial planning advisors next? Where will we stop, once we start making a case for demonising and punishing one group of people.
Thirdly, the people earning the bonuses aren’t just the directors. Many of the people who have earned substantial bonuses have actually earned them by making huge sums of money for the banks. By penalising them, you will chase them away and damage the banks even more. And make no mistake, these people are very mobile and could quite easily become “non-doms” without even selling their homes or moving.
Fourthly, they will spend their bonuses, unlike Quantitative Easing, which was just a means to allow the government to finance debt. So by giving these people huge bonuses, you’re actually doing more to stimulate the British economy than all the fiscal stimulus packages that have been outlined to date.
Fifthly, these are bankers, for heaven’s sake! These are people skilled in the dark arts of legally minimising their tax obligations, or have ready access to people who are. So even if this tax is implemented, it’s going to earn very, very little for the economy and probably cost more to collect than it brings in.
Does anyone actually believe that a windfall tax is anything other than a diversionary “taxtic” to distract our attention from the billions and billions of pounds of our money that our incompetent government has thrown at every bit of special interest pleading and the aggressive devaluation of the pound, all of which has manifestly failed to achieve anything of use as we remain the only member of the G20 group of countries which is still in recession?