'If you were chancellor, what'd you cut?' poll discussion

chrissie55

Stop the wars - stop buying MPs homes that they can profit on - stimulate construction by building council homes - create green jobs - improve training - liberalise cannabis & 'victimless crime' laws - tax bank transactions, since it was bankers' gambling that created the crisis.

MSE_Martin

ipod_killed_the_musicshop wrote: »

What an incomplete poll.

Where's the bankers bonuses, the tax on banks, Lord Ashcroft and the rest having to pay tax? No tax cut for the richest 300 estates? Regardless of whether the Lib Dems are there to stop you or not? The NI contributions from employers?

What a biased poll.

Today we have the government spending review. The issues of taxes is not what is being discussed - the poll reflects this.

sharrison01

Assuming that a bank in the UK is completely independent from government help and it's employees are making the bank lots and lots of money then why on earth should those employees not be entitled to a bonus??? The cases of part government owned banks are ethically different but then these banks are still private with the majority shareholder being the UK government. Any business is entitled to pay their employees whatever they see fit as the CEO/board inevitably have to answer to the shareholders - if no dividends are being paid on those shares and that business is paying huge bonuses then the shareholders will be unhappy and exert their powers as "owners" of said business. If the UK government has decided to "invest" in these banks by purchasing their shares then more fool them for putting money into a private business and not either making it public or stipulating conditions on that business.

The financial sector is the UK's biggest asset and to impose conditions with regards to pay will have very poor consequences for everybody. When somebody receives a bonus, whether it be large or small, in any business then it will more than likely be because that employee is worth more than their salary dictates. They will also not just put that bonus in cash under their bed - they will invest it, spend it, save it, whatever. Either way, that money has been taxed so the government has had it's share and then will go back into the economy which will help businesses to survive, whether it be giving a car company a sale to help their profits, keeping a builder in business through home improvements or any other spending that helps to prop up the economy. To limit these bonuses would push many financial institutions to operate from other countries as with technology there is now no restrictions with location, meaning that the UK would lose the relative corporation tax, income tax and spending habits of these companies.

In this country we love a scapegoat and the tabloid press are quick to give us one. The banking sector provided the spark but realistically our spending habits are what are essentially to blame for this recession. Cheap borrowing may have facilitated this spending but in the end nobody has forced people to buy cars on credit that they cannot afford or remortgage their houses to give them the money to waste on material items. The financial sector will historically blow up like this every 20 years or so but it is such a large contributor to the UK economy that over given period it still gives a ridiculous amount of money to this country despite its occasional crises.

The real way forward for the financial sector is for retail and investment to be completely separate. If Mr A walks into his bank with a cheque for X amount then that money should stay in his bank. The bank might suggest he speaks with somebody at their completely separate investment bank that can offer a higher rate of return for higher risk and it is then up to Mr A to decide if he wants to earn 0.5% in his safe bank or risk some of his money for a higher return. Everybody will have a different attitude to risk and the salesmanship of the retail bank to convince Mr A to speak with their investment bank and then that investment bank to get Mr A to invest his money will be more important but in the end it will be Mr A's choice to risk his money. This will then mean that the retail bank will always have money because they will simply pay savers an interest rate and then offer that money to borrowers at a higher rate, thus making a relatively risk free profit. The investment banks would then be free to sink or swim because those that have invested with them did so of their own accord.

As a side point to restricting bankers' bonuses, why should the government stop at banking? The energy sector will happily pay it's top employees similar bonuses yet the average person does not complain that their energy bills are too high, especially when a percentage of the sick and elderly will die this winter due to fuel poverty. If a business, whatever sector it is in, is a private business then it should be free to pay people whatever it chooses. Why should an employee that earns a bank £10m per year, which is not a lot in banking terms, be deprived of a big bonus when they have worked hard for it? Our culture is becoming one with a lack of hard work and a habit of blaming other people for doing well with their hard work. I would love to earn a bankers bonus every year but rather than blame them, I'm going to use my efforts to try to join them. This would surely be better than sitting around pointing fingers...

drobson

I am struggling to square the whole cuts things in my mind.

My concern is that the investement bankers are the root cause of the credit crunch across the western world, but nothing seems to have happened to them nor their bonus culture that puts the emphasis on short term gain and risk. It was that short term risk that started the whole credit crunch. Remember the toxic market in US home loans.

I think it was Adair Turner who described them as "socially useless".

I also heard recently that wall street expects this to be a "bumber year for bonuses".

It just sticks in the throat, why not tax them till their pip squeek, I am sure there is a lot of money to be made from an additional tax on financial transactions, plus it will ensure less money is available for bonuses.

They keep using the "the best will leave for another coutnry argument". Well let them leave, the are useless anyway.

:mad:

drobson

Your approach would all be well and good IF the banks didnt have any impact on society. They were to blame for the credit crunch, so they are clearly not independent.

Too big to fail, and therefore they know the government of whatever country will bail them out. How is that going to stop risk taking.

In would only take China, the EU and USA to agree to implement a tax on share dealing and job done.

Tim_Hoy

What I would cut first is missing from the list in the poll. Each year, billions of tax evading pounds are siphoned into Swiss and other tax haven bank accounts. Vodophone still has an outstanding tax bill for £6 BILLION that is being written off because it's dragged on for so long. If the PAYE fiasco indicates that I have unwittingly underpaid my taxes, I'd like the right to procrastinate and squirm until that too is written off. Oh no - I can't do that because I'm not a greedy multi national. Back to the drawing board. There's another irony of the £6 billion figure - it equates with the sum that government are cutting from public services in their first round. Thank goodness for Martin's Money Tips and Private Eye, without whom, I would be in the dark about these appalling double standards.

I wouldn't cap bankers' bonuses or incomes, but I also wouldn't pay them until they had settled their debt sharrison01 and as for your comments Chrissie55 - Well put. I agree entirely.

sharrison01

drobson wrote: »

Your approach would all be well and good IF the banks didnt have any impact on society. They were to blame for the credit crunch, so they are clearly not independent.

Too big to fail, and therefore they know the government of whatever country will bail them out. How is that going to stop risk taking.

In would only take China, the EU and USA to agree to implement a tax on share dealing and job done.

I'm assuming that your response is in answer to my post.

The risk taking investment banks should be free to take as much risk as the want as they should be completely independent to retail banks so will only impact on those in society that choose to invest their money with an investment bank which they do of their own accord.

It is not right for someone like RBS to take in little old ladies' deposits on the high street and then use that money to give it to it's investment arm to risk on US housing or any other way as such that this money can be lost. If the investment bank convinces this little old lady to invest this money with them, and she is of sound mind, then that is her prerogative and she will either enjoy the profits or suffer the consequences of her risk taking. This would then most likely mean that the investment banks will have less money to play with, thus reducing their profitability and reducing bonuses any way.

The little old lady that lives next to me has just paid £500 to have some bees removed from her garden, a two hour job, by some "nice" man listed in the yellow pages. I phoned him for the same job and got quoted £150. How many of us have been ripped off by builders or mechanics or any other profession where they have more knowledge than you? Should we start imposing taxes on them or is it because they work in an industry of lots of individuals rather than one of few big companies that it is so different?

drobson

Arent the investment banks responsible for managing unit trusts and as you are no doubt aware unit trusts make up most pension funds, most child trust funds, most long term investments for paying back morgages, etc.

Investment banks also deal in shares from most of our major UK companies. Investments by little old grannies make up a small percentage of the shares that are exchanged. So they cannot be seperated unless the seperation is that "risky" investments are managed by investment banks and less risky investments like unit trusts for morgages, pension funds, personal investements are managed by retail banks that are incentivised on long term success, rather than being incentivised on short term gain.

I do agree with your seperation point, its just about where on the risk threshold that the seperation occurs.

sharrison01

drobson wrote: »

Arent the investment banks responsible for managing unit trusts and as you are no doubt aware unit trusts make up most pension funds, most child trust funds, most long term investments for paying back morgages, etc.

Investment banks also deal in shares from most of our major UK companies. Investments by little old grannies make up a small percentage of the shares that are exchanged. So they cannot be seperated unless the seperation is that "risky" investments are managed by investment banks and less risky investments like unit trusts for morgages, pension funds, personal investements are managed by retail banks that are incentivised on long term success, rather than being incentivised on short term gain.

I do agree with your seperation point, its just about where on the risk threshold that the seperation occurs.

My point on separation has obviously been far more simplified than it would be in reality but the result would be a lower risk to retail banking from the actions of their investment banking arm. This is merely a simplified example of how there are other ways of reducing risk in the banking sector but over taxing or limiting bonuses is not the right thing to do.

Anyway, if more taxes were to be raised by the banking sector then with the state of public finances I'm not really sure where it would be better off?!?

cport80

It's kind of hard to accept from a bunch of millionaires that the rest of us need to take pay cuts and job losses. After the recent Dispatches show highlighted them and their billionaire advisor friends avoiding paying huge sums of tax I am unwilling to listen to any more of their justifications for any cuts at all. The phrase "We can't afford it" doesn't sound right coming from such people. Just because tax avoidance is legal doesn't make it morally right. To then tell the country there's no money left in the pot to pay for important things is just plain wrong.