The International Monetary Fund might be seen as a rather dour, conservative organisation populated by pin-striped pointy heads but clearly someone there has a knack for the PR impact of a snappy acronym.
The suggestion of a FAT levy (Financial Activities Tax) – the second part of the IMF's proposals for making banks pay up to avoid another financial crisis – has beautifully captured the prevailing mood of almost everybody. Except the banks, which could also face a Financial Stability Contribution or FSC.
The IMF's report says "more analysis" will be needed to settle on the "desirable forms, level and scope of any levies or taxes". But with the suggestion in the report that these could raise up to 4 per cent of GDP, with figures of a £10bn bill just for British banks being bandied around, it's no wonder the industry has put its collective arms up in horror.
Said one industry source: "Would that replace the 16 per cent of GDP the banks already provide, or be in addition to it? In the UK it (the banking sector) already accounts for about a quarter of tax revenues, made up of corporation and personal tax paid by bankers."
Another, at a large UK bank, said: "Really, they need to consider the impact of this sort of proposal. If you impose taxes like this you may just end up with weaker banks that are less able to deal with the fallout the next time a crisis comes around. And where is the capital going to come for banks to lend? If you make banks an unattractive investment, that just won't be available any more and governments will have to step in."
Other reactions were scarcely more positive. The Association for Financial Markets in Europe, the successor to the London Investment Banking Association, said: "The IMF has set the right objective in addressing the need to avoid another financial crisis, but appears to have chosen the wrong means to achieve it.
"The financial sector should not rely on public funds in the event of a crisis. As an industry, it needs to put in place measures that will enable failing firms to be wound down or restructured without needing taxpayer support. Banks must be allowed to fail and the cost of dealing with any failure must be first met by shareholders and creditors, not taxpayers.
"On that basis, there should be no need for tax revenue to be set aside as an insurance against future bank failures. The proposed taxes would certainly bolster government revenues but would not reduce risk in the system and, ironically, could increase it by implicitly building in insurance for banks' risky behaviour."
There's the "moral hazard" that the likes of Mervyn King, governor of the Bank of England, has often spoken of. The theory goes that if banks know there is a bailout fund to cover them if things go wrong, where's the incentive to refrain from risky behaviour, the type of the behaviour that caused the crisis in the first place?
If banks are cross, insurers, which also face the tax, are fuming. Kerrie Kelly, Association of British Insurers' director general, said: "Insurers were not a source of failure and their business model means they are not subject to the types of credit and liquidity risks that destroyed so many banks. Any inclusion of insurers within the scope of levies designed to impact on banks is essentially inappropriate and not justified."
Michael Devereux, Clemens Fuest, and Giorgia Maffini at the Oxford University Centre for Business Taxation, weighed in: "Paradoxically, even apart from the moral hazard problem, the FSC could exacerbate risk-taking. A levy on non-insured liabilities may increase the incentives for banks to hold more equity capital.
"But regulatory capital requirements typically depend on the risk of a bank's asset position. A tax that induced banks to hold more equity capital would relax this constraint, and could therefore permit banks to hold riskier assets."
However, not all banks are as vociferously opposed to the new tax as the big four and the investment banks. Virgin Money, a new entrant that the Government hopes will contribute to competition in the sector, described the tax proposals as "hardly ideal". The company said: "Given our conservative business/banking model, this will affect us far less (since it will be adjusted to reflect risk) than it will the big banks with significant investment arms.
"On the remuneration side – as a retail bank (only) all our staff are paid a percentage of salary in terms of bonus (if they get one) not a multiple of salary, so once again this affects us less than the banks with significant investment arms."
Virgin has pointed out that new entrants are pushed into conservative business models by regulation. So a tax which impacted more on the riskier businesses of the existing players might even favour them, and help to enhance competition in a sector that is in desperate need of it.
In the meantime, politicians from all three parties have rushed to back the plans – not least because the public mood is in support of such a levy, while at the same time scoring points. Alistair Darling, the current Labour Chancellor, says the international tax proposal rather exposes Tory George Osborne's suggestion that Britain could go it alone.
Mr Osborne, of course, begs to differ, while Vincent Cable, for the Liberal Democrats, says the IMF endorses his party's views.
But will it actually happen? The IMF has highlighted the danger of unilateral measures, warning that they "risk being undermined by tax and regulatory arbitrage, and may also jeopardise national industries' competitiveness". Coordinated action, it said, would promote a level playing field for cross-border institutions and ease implementation.
Japan, and Canada, which will host the June G20 meeting where these proposals will be discussed, have already set themselves in opposition. Canada sees no reason why its banks should pay for the failings of others. Jim Flaherty, Canada's finance minister, has said: "While some countries may choose to pursue an ex-ante systemic risk levy or a tax, I do not believe that this would be an appropriate tool."
But maybe a less draconian proposal could twist his arm? It's possible the IMF has bandied a scary figure like 4 per cent of GDP around so that a lesser levy might win over.
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