Editor's take: Populism risks smothering the City
As anyone who's watched the BBC's Can You Bank on Me? programme will be aware, banks are not popular, particularly in Blackpool.
The chairman of the Financial Services Authority is working on the same rationale that prompts people with big credit card debts to lecture redundant financiers about ruining the British economy. According to Adair Turner, much of what banks do is socially useless and should therefore be taxed.
Turner's claims have been warmly received, eliciting comments, such as this on The Times' website: "When I pay a cleaner a fiver, she does something useful. What does a stockbroker actually achieve?"
His keenness on taxing transactions is unlikely to result in policy changes: The Treasury has already indicated that such a tax is not 'on the table.'
However, the message that banking is socially useless and that the FSA has little intention of standing up for the City's position as a financial centre is unhelpful at a time when financial services professionals are already said to be streaming out of the UK and the country is already about to become the most highly taxed financial centre in the world for high earners.
As one commentator on the Guardian site puts it -
"That's right, get rid of the banks. I'm sure Frankfurt and Paris will happily take all those socially useless banks that pay billions in tax already and support hundreds of thousands of jobs. Finally Socialism will triumph and we can all drive Trabants to our holiday share home in Skegness. I'll stay in Hong Kong, with 15% tax, full employment, a functioning service structure, where people are encouraged to work and there are no whingeing socialists."
For all its faults and recent failings, it's worth bearing in mind that the financial services industry accounted for around 12bn or 25% of the UK's total corporate tax take in 2007 and that the industry plays a significant role in plugging the country's balance of payment deficit. Demonising it may win popular plaudits in the short term, but is likely to prove long term foolish.
