Bankers offer minimal concession to head off a Financial Transactions Tax
The Financial Times’ front page this Saturday morning has a startling headline: “Bankers in favour of paying global tax”! But it’s not as good as it looks. The news from the World Economic Forum in Davos is that several leading global bankers have decided that they need to accept a lesser tax to head off pressure for tougher measures such as breaking up the big banks or levying a tax on financial transactions. But it shows they’re worried!
What bankers like Joseph Ackerman of Deutsche Bank and Bob Diamond of Barclays are willing to accept is in reality simply a legally enforced insurance scheme, so that next time they crash the global economy, taxpayer bail outs of their institutions will already have been paid for through premiums.
This is hardly over-generous: they’ll get the money back some day. It takes no account of the damage that their economic recklessness has had on the real economy of Main Street – the costs of that would not be paid for by such a bank levy.
That is why a Financial Transactions Tax is so important. Even at the staggeringly low level being suggested (0.05%, or one twentieth of a percent), it would raise hundreds of billions of pounds every year. Loose change for the bankers, but enough to pay for real change for the rest of us. It might even reduce the impact of financial speculation on our economies.
A financial transactions tax would help pay for decent public services like education and health, decent work for the unemployed and action on climate change, not just in the developed world but in the poorest countries too.
We probably need all of the above: a Financial Transactions Tax, a bank levy, and the breaking up of institutions that are ‘too big to fail’. We need to use the bankers’ acceptance of the least painful of these to press harder for more radical reforms.