Friday, November 26, 2010

British banks to buy tax-dodging permission

From Britain's Daily Mail (hat tip: Offshore Watch:)
Britain's leading banks are in talks with the Treasury about contributing £1.5billion to community projects to avoid being hit with new taxes. The cash will be used to create a ‘Big Society Bank’ which will make money available to charities, social enterprises and voluntary groups. As part of a far-reaching deal with the Government, Britain’s biggest banks are also discussing plans to slash pay-outs in the next round of City bonuses. . . .the reputation-building initiative has been nicknamed ‘Project Merlin’.
And in exchange for this?
In exchange for making cash available for community projects and slashing bonuses, ministers may agree not to impose any bonus or transaction taxes on the industry on top of a £2.5billion-a-year levy announced earlier this year.
This seems like a win-win for banks, and a lose-lose for the rest of us. Apart from the promise to "slash pay-outs" which would be a good thing if (repeat if) this is genuine, and not an elaborate trick, this seems to be a way for the British government to use public spending in a way that it serves to rehabilitate the justly appalling reputation of City of London banks. This is an extraordinary display of cynicism. As Lord Oakeshott, spokesman for the coalition Liberal Democrat party puts it:

"If the banks think that Government policy can be bought for £1.5billion, they have got another think coming.
We fear, unfortunately, that in Britain exactly that can happen: government policy is indeed for sale.

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