CBI head dismisses Tobin Tax idea

Business’s representative head Richard Lambert has dismissed the idea of
introducing a Tobin Tax.

Speaking at the CBI’s annual north east dinner in Gateshead, director general
Lambert said that a tax on transactions, suggested by Lord Turner, could not
work unless introduced across the world at the same time.

“You may or may not be in favour of a Tobin-style tax on financial
transactions: for the record, I am definitely not,” said Lambert.

“But as Adair Turner himself acknowledges, you’d 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.”

The key issue to deal with at the moment was extending credit lines through
to SMEs.

“We’ve all heard the horror stories about businesses running into brick walls
at their banks. Given the savagery of the credit shock, it’s no wonder that
companies have been battening down the hatches and doing everything they can to
reduce credit risk.”

Lambert also said that financial services remuneration as a whole had not
increased as much as in the public sector.

“It’s true that the contribution of the sector as a whole to gross value
added across the economy picked up in the years ahead of the recession. But on
the most recent figures, the share still stood at no more than about 8 per cent,
which is roughly where it was in the late 1980s.

“Expressed in a different way, total pay of financial services employees
represents a bit less than 4% of GDP. For comparison, the public sector
equivalent is over 16 per cent. Which figure is too big?”

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