James Moore: Bojo, banks and Barack's supertax
Friday 15 January 2010
Outook So the Mayor of London, Boris Johnson, has written a letter to the Chancellor with a complaint that the Government's policy on financial services is "ill-judged, will weaken our financial sector and send out the wrong messages about London's global role". In case you didn't realise, Mr Johnson is moaning about the supertax on bonuses on behalf of all those bankers who might have to start sounding out estate agents about the price of property in Geneva (or whatever city becomes the destination of choice for London's poor, put-upon financial services professionals).
Perhaps that's exaggerating a little. Bojo does make clear his disapproval of "the greed and short-sightedness" of bankers. But he says the tax is "short sighted" because London is the only financial services centre with a special tax on the industry... well, except for Paris (which is doing the more or less the same thing) and the US (which has just proposed a levy of its own that makes the "super-tax" look like so much small change).
If Alistair Darling is to be believed (and Treasury forecasts these days have to be taken with a very big pinch of salt), the bonus tax will raise in the region of £550m – for one year. President Barack Obama's plan, if it gets through Congress (and it would be a brave politician who votes against it) will bring in something like $117bn over 10 years. While Obama's tax is very different, the motivation is the same. It is easier for him because, of course, no bank would dare stoop to the cynical tactic of threatening to leave the US. That would be economic lunacy (although, to be fair, the banks have proved they are not immune to that disease).
Predictably, they have reacted with fury. The bosses of America's banks appear to have thought that a few mea culpas and crocodile tears before Congress would buy off some of the public outrage that is being aimed at them (sound familiar?). Cosseted in their expansively furnished eyries with a merry band of yes-men employed to provide "advice" on public relations, they still just don't get it.
If an illustration of the sheer contempt in which the industry holds all but its high priests were needed, just listen to Jamie Dimon, the chief executive of JP Morgan Chase, who had the gall to say using tax policy to punish people was "a bad idea" because "all businesses tend to pass their costs on to customers".
This is the man, remember, who will today throw billions of dollars at the rapacious band of pin-striped plutocrats he employs as a reward for squeezing its customers for every penny they can get. If raising fees is Dimon's response to Obama's tax, it's time that those customers paid closer attention to the line marked "compensation" in JP Morgan's annual report, and asked whether the services provided by its bankers are really worth what they cost.
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