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Econoblog

Discussion and analysis of the latest economic issues.

By Sean O'Grady, Economics Editor of The Independent.

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It says it all and it says nothing. The Coalition Agreement states quite baldly that the Government will indeed introduce a bank levy, a remarkable moment for a Conservative-led government. But, apart from the usual commitment to consult, it says nothing about what sort of tax it will be.

One suspects the UK will go along with a surprisingly radical proposal from the IMF, acting on instructions form the G20, that taxes both banks activities and their pay and bonuses, partly because banking is actually undertaxed for what are called "technical reasons" - ie it doesn’t charge VAT.

Whatever its merits, it would certainly cost the banks a great deal of money when they are still very fragile. Over the next year or so it may be more likely that the banks will be getting more money form government, rather than the other way round, given the way the sovereign debt crisis in Greece and elsewhere threatens the value of the government bonds that they all hold (ironically because national regulators insist on the them holding such "ultra safe" assets).

Comments

biochem456 wrote:
Wednesday, 15 December 2010 at 04:35 am (UTC)
Of course banks, fat-cows should have more money, they create this crisis and they should be payed well for this.
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