CBI blasts Tobin tax

4 September 2009 10:12 am

Speaking at the CBI's annual North East dinner last night, CBI director general Richard Lambert said he was not in favour of the tax which FSA chairman Lord Turner recently mooted, and added that there was certainly no point in introducing it in one country if it was not enforced elsewhere in the world.

Lambert praised Turner’s analysis of the credit crisis at a lecture for the Economist last year, saying it is “the best there is,” but then went on to criticise the FSA chairman’s more recent comments in an interview with Prospect magazine.

Lambert said: "In a free society, it is not the job of a politician or for that matter, of a regulator to argue that a particular form of activity is or is not of social value."

He said: "The trouble is the headlines Lord Turner has generated are about the wrong issues. There are only two questions that really matter in the banking market today, and they are not about bankers' pay and rations, or the social value of credit derivatives."

Lambert said the issues that matter are getting credit flowing through to small and mid-sized businesses, and getting the banks to implement shock absorbers to avert future disaster and “get off the taxpayers’ backs.”

When addressing the complaints about salaries in the financial services industry, Lambert highlighted the fact financial services salaries make up 4 per cent of the GDP while the public sector makes up 16 per cent.

He asked: “Which figure is too big?”

On the Tobin tax proposals he said: "You may or may not be in favour of a Tobin-style tax on financial transactions: for the record, I am definitely not.

"But as Adair Turner himself acknowledges, you would have to be mad to impose such a levy unilaterally without it being imposed at the same time in the rest of the world.

"Since there is no chance of this happening, this is not a point on which to linger."

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