Here’s the reaction over in Britain to news about the banking sector’s recent return to outsize profitability:
Ministers are drawing up plans for a tax raid on Britain’s banks worth hundreds of millions of pounds, The Sunday Telegraph has learned.
The radical move, being considered as a way of forcing banks to pay a price for the taxpayer-funded bail-out of the financial system, could include a one-off “windfall” tax on profits.
….Last night, in his weekly podcast , Gordon Brown, the Prime Minister, said his government would be “taking extensive action to reform the whole culture of the financial sector”. Any action is likely to hit all UK banks — even those which have not been part-nationalised, or given access to hundreds of billions of pounds worth of taxpayer-funded collateral.
There is understood to be “considerable anger”, both inside No 10 and among Cabinet ministers, over recent signs that banks are once again ready to unveil huge profits and bonus payments.
I don’t know if a one-off windfall profits tax is the right approach to this, and I don’t think it should be motivated by anger in any case. The rescue plan put in place last year was bound to make the banking sector pretty profitable in the short run, so it’s hardly a surprise that that’s what happened. Nonetheless, there’s no reason the industry as a whole shouldn’t be expected to help pay for its own rescue one way or another. There’s certainly no reason the taxpayers should do it all.