A levy is not enough….
George Osborne, who David Cameron no doubt had to spend much time reassuring about his future central role; ‘Don’t worry Gideon, one day you will be a real Chancellor’, has apparently ‘welcomed’ the European plans for a banking levy. My point on this is relatively simple; a levy which is either ploughed back into servicing a national debt or ‘ring-fenced’ to protect against future failure may sound radical and tough but it really is not; in fact, it rather let’s banks off the hook. Sensible banks probably won’t be too averse to paying into a fund which should they fail they know they can raid (to be fair to Gideon, he did make a similar point) and if the money is ploughed back into servicing the national debt then surely that is just moving the money in effect to errrr another bank.
Laughably, the framework Osborne wants to work too is going to be designed by the IMF which is a bit like the pot not just calling the kettle black but getting out a paintbrush and slapping on three coats of the finest black paint. Consumers might well wonder why they are looking down the barrel of a totally regressive VAT increase yet politicians still insist taxing financial transactions cannot be done. What lies at the root of all the problems the financial sector has is the culture of aloofness; the special treatment it receives from governments and the consequent lack of concern for the wider implications of its actions and a levy does nothing to tackle that; in fact, arguably it reinforces it especially if that levy is a safety net insuring against the unregulated silliness of the financial sector.
It is constantly insisted that such a tax would not work because it would never be possible to agree internationally which as is shown above is simply not true is it? Why can the international community agree on a levy but not a tax (not all of which has to be levied internationally in any case)? I think most people will fairly question the sincerity of people who in one breath can talk about this levy but in the next accuse the so-called Robin Hood Tax of being unworkable. Labour has to be serious about radically redressing the power relations between society and market and one of the requirements of this is to make the latter subject to the rules, needs and demands of the former. Supporting the ‘Robin Hood Tax’ would be a good first-step in that direction….