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UK bank plans small change compared with US ‘super-tax’

So the Mayor of London, Boris Johnson, has written a letter to the Chancellor with a complaint that the Government's policy on financial services is “ill-judged, will weaken our financial sector and send out the wrong messages about London's global role”.

In case you didn't realise, Mr Johnson is moaning about the super-tax on bonuses on behalf of all those bankers who might have to start sounding out estate agents about the price of property in Geneva (or whatever city becomes the destination of choice for London's poor, put-upon financial services professionals).

Perhaps that's exaggerating a little. Bojo does make clear his disapproval of “the greed and short-sightedness” of bankers. But he says the tax is “short sighted” because London is the only financial services centre with a special tax on the industry ... well, except for Paris (which is doing the more or less the same thing) and the US (which has just proposed a levy of its own that makes the “super-tax” look like so much small change).

If Alistair Darling is to be believed (and Treasury forecasts these days have to be taken with a very big pinch of salt), the bonus tax will raise in the region of £550m — for one year. President Barack Obama's plan, if it gets through Congress, will bring in something like $117bn over 10 years. While Obama's tax is very different, the motivation is the same. It is easier for him because, of course, no bank would dare stoop to the cynical tactic of threatening to leave the US. That would be economic lunacy (although, to be fair, the banks have proved they are not immune to that disease).

Predictably, they have reacted with fury. The bosses of America's banks appear to have thought that a few mea culpas and crocodile tears before Congress would buy off some of the public outrage that is being aimed at them. Cosseted in their expansively furnished eyries with a merry band of yes-men employed to provide “advice” on public relations, they still just don't get it.

If an illustration of the sheer contempt in which the industry holds all but its high priests were needed, just listen to Jamie Dimon, the chief executive of JP Morgan Chase, who had the gall to say using tax policy to punish people was “a bad idea” because “all businesses tend to pass their costs on to customers”.

This is the man, remember, who will today throw billions of dollars at the rapacious band of pin-striped plutocrats he employs as a reward for squeezing its customers for every penny they can get. If raising fees is Dimon's response to Obama's tax, it's time that those customers paid closer attention to the line marked “compensation” in JP Morgan's annual report, and asked whether the services provided by its bankers are really worth what they cost.

Something of a mixed bag from the high street yesterday, although shareholders in DSGi (the silly name for Dixons) had something to cheer about thanks to a robust set of numbers, let down a bit by PC World.

Partly the group has benefited from people rushing to buy before the reversal of the VAT cut. However, television sales have been steadily improving for a while and perhaps it's no surprise. After 18 moths of hideous recession with moths building up in the wallets of almost everyone, there are a lot of people with antiquated kit they will have been itching to replace. Something they will no doubt have cause to regret with the advent of 3D TV over the next year which promises to make most of those snazzy new flatscreens outdated in a matter of months.

The next couple of quarters might be slower for the company, but when the new machines come into the shops, even a double-dip recession is unlikely to put technophiles off. With electronic superstores proving popular (why did it take so long to realise knocking down the walls between Curry's and PC World stores was a good idea?) it should be happy days for Dixons (sorry, DSGi).

More evidence for those arguing that it's time to cut the burden of tax on companies seeking to exploit the sizeable reservoir of oil that still remains in the North Sea. Deloitte says production in our part is down by 35 per cent this year. Bad enough, you might think, but when compared to the 18 per cent rise from Norwegian territorial waters it is appalling.

The issue of taxation needs to be addressed. With a frightening-looking budget deficit to deal with, cutting the burden on oil barons looks on the face of it to be politically suicidal. But this is an area where a sizeable tax cut would ultimately benefit the Exchequer by raising the overall volume of production and thus producing more revenue for all.

It's not just the taxation issue, though. In Norway, sizeable players are at work, not least the state controlled Statoil. In UK, the situation is different, dominated by any number of small operations eking out an existence at the fag end of the Alternative Investment Market. Such a structure is inefficient.

I'm not arguing for the British state to get involved in the market. Our record of government involvement in industry is just too appalling to contemplate such a move.

But there is now a need for more state engagement, and measures to encourage either consolidation in what exists now, or to persuade bigger players with the firepower to invest in the technology to make the most of these reserves to come in. It is farcical that as we scrabble around trying to buy energy from others we have an abundance on our doorstep.

Belfast Telegraph