It is surely a measure of how unpopular bankers are that even the Daily Mail sides with the government on the windfall tax. Whatever the practical problems of such a tax, and there are many, the moral and political arguments are stacked against the bankers. As the FT’s Martin Wolf succinctly put it:
[I]t is hard to argue in favour of exceptional interventions to bail out the financial sector at times of crisis, and also against exceptional interventions to recoup costs when the crisis is past. “Windfall” support should be matched by windfall taxes.
According to the Guardian, the Chancellor wants a shock tax to break the bonus culture. The shock already seems to be working if the bleating from grandees of the financial sector is anything to go by. By introducing such a tax, Alistair Darling will be calling the bluff on a twenty year old orthodoxy – that if you over-tax and over-regulate the financial services industry, banks and bankers will relocate en masse to other countries.
The time is probably as right as it will ever be to test this myth. After all, the job market even for bankers is not great at the moment. Are there really enough vacancies in Switzerland, Dubai and Singapore for so many of Britain’s brightest and best? Are bankers really so mercenary that they would abandon family, friends, aging parents and children settled at school just to avoid a tax increase?