Tuesday, 6 October 2009

Why are the poorest being asked to pay for the bankes folly

Why do politicians from both political parties seem to think the way to address the deficit is to hit the poorest people hardest? Both Conservatives and Labour seem obsessed with cutting benefits and hitting the lowest paid. Meanwhile, the real public welfare recipients, the banks, escape untouched.
Instead of attempting to make the banks pay back some of the money they have absorbed, the concern the worry seems to be that a few of them might leave the country if unduly penalised. The hedge funds are relocating to Switzerland - who really cares? Is there really any truth in the line that these people are such great wealth creators that we cannot let them go. Most of the highest paid employ accountants to keep their tax payments down to the absolute minimum anyway.
In the longer term governement should be looking to move the countries economy away from reliance on this volatile sector. In the short term, why not impose a flat rate tax on the profits of all banks. This would hit those hardest who caused the problems in the first place and encourage self regulation of the whole sector. Implementation of the Compass recommendation for a High Pay Commission would be another welcome move.

1 comment:

  1. While I agree with the general thrust of your piece, it's a little naive to assume that finance companies moving abroad has little effect on the exchequer's income. While those directly involve certainly avoid as much tax as possible, there are a lot of lower paid job reliant, from ancillary workers at the banks, to the shops and services they employ.
    As to taxing the profits on banks, remember a lot of banks are now publicly owned, in part or wholly, so the "profits" are public money anyway! Assuming the banks thrive the government shares will be sold and any profit used to repay the government's debts.