Speaking in an interview in Prospect Magazine, Turner believes a tax on financial transactions in the City would cut bank profits and subsequently the assets available for bonuses.
Turner questioned much of the City’s activities, claiming they were “socially useless” as well as stating that a “swollen” financial sector paying excessive salaries has become too big for society.
He said such a tax would be “a nice sensible revenue source for funding global public goods”.
Turner also said that the FSA should “be very, very wary of seeing the competitiveness of London as a major aim,” pointing to the City becoming a destabilising factor in the British economy.
A tax on financial institutions is known as the “Tobin Tax” and is named after American economist James Tobin who suggested it in the early 1970s.
Turner says that initial issues over tax should be tackled by the government, but does admit to concerns in the long-term.
“If you want to stop excessive pay in a swollen financial sector you have to reduce the size of that sector or apply special taxes to its pre-remuneration profit. Higher capital requirements against trading activities will be our most powerful tool to eliminate excessive activities and profits.
“And if increased capital requirements are insufficient I am happy to consider taxes on financial transactions – Tobin taxes.”