Taxing bankers to death is more difficult than “wring[ing] their necks”, the punishment Nick Clegg says he favours.
That’s why the 50p rate – dubbed the “banker tax” – was always going to be a blunderbuss of a weapon with which to punish the guilty men of the UK’s financial services community.
In a recent hearing of the Public Accounts Committee, I asked Treasury Permanent Secretary Sir Nicholas Macpherson how many people working in financial services actually paid the tax.
Unable to give an answer at the time, Sir Nick agreed to provide a written note to the committee.
I read it over the weekend and, as I suspected, the 50p rate is overwhelmingly paid by non-financiers. Brilliant!
Out of the 275,000 paying the new top rate of tax, only 63,000 work in ‘financial intermediation’, defined to encompass banks, insurance firms and pension funds.
The 50p rate is hitting three times more innocent bystanders than bankers.
On its own, this would be a powerful argument against continuing with it for a minute longer than politically necessary.
But we will soon find out whether the banker tax will generate anything like the £2.7bn that Labour projected for it in the new marginal rate’s first year in operation.
If it turns out to lose the Treasury money, as many suspect, the pressure to scrap it will be immense the minute the public sector pay freeze ends.
Jim Pickard
Kiran Stacey