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Savers could pay for Turner’s Tobin tax

The Investment Management Association has warned that Lord Turner’s bank tax proposal could end being paid for by savers.

In an interview in Prospect magazine, FSA chairman Lord Turner floated the idea of a “Tobin tax”, named after American economist James Tobin, who suggested it in the early 1970s.

Turner said: “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.”

But IMA chief executive Richard Saunders says: “Lord Turner has rightly identified the need for banks to manage risk better and to keep higher levels of capital when they engage in riskier activities. We welcome the debate but transaction taxes carry the risk that, like stamp duty, it is the ordinary saver who ends up paying.”

British Bankers’ Association chief executive Angela Knight says: “The UK would receive less revenue through taxes and there would be job losses, not just in the banking industry but also in other businesses, large and small, that provide services to banks.”

London Mayor Boris Johnson says the plan is “crackers” and Conservative MP for Wokingham John Redwood says: “The idea that we should now tax bank transactions to stop them paying mega bonuses is absurd.”

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