UK bonus tax

Financial Times:

Alistair Darling admitted on Wednesday that Britain’s controversial supertax on bankers’ bonuses had failed to change the industry’s behaviour over pay as “imaginative” financiers devised ways to avoid it.

The former Labour chancellor of the exchequer, who introduced the levy last year amid an unprecedented outcry over bank pay, said he thought it was unlikely that the tax would be reinstated by the current Con-Lib coalition government.

However, he warned the industry that it faced equally unpopular reforms unless it was more “sensitive” to the public’s concerns following the worst financial crisis in generations.

“I think it will be a one-off thing because, frankly, the very people you are after here are very good at getting out of these things and . . . will find all sorts of imaginative ways of avoiding it in the future,” Mr Darling said at a financial services conference sponsored by Nomura, the Japanese investment bank.

“But what I wanted to do was send a message to them that we all live in the same world together.”

It's hard to believe after reading this that Darling was deemed fit to manage anything more integral to the UK economy than a popsicle stand fish and chips shop. I am surprised that he is apparently surprised bankers changed their behavior in response to the tax and made adjustments in order to avoid it rather than simply taking it on the chin. This is perfectly obvious to most of us that inhabit the real world.

He then seems to imply that the tax was cooked up as more of a political statement than an efficient means of capturing government revenue. Is that how government is supposed to run? As a tool of vengeance? And the last sentence about living in the same world -- what does that even mean?

No reason for those of us on this side of the Atlantic to get too smug, however. Given this guy's tone and apparent class warfare sentiment there's good reason to think he'll be on the shortlist for Secretary of the Treasury should President Obama ever give Tim Geithner the axe (I'm sure expedited citizenship could be arranged).