The Institute of Economic Affairs critiques New Lib Dem proposals – tax prudent banks to shore up risky ones:

I welcome Vince Cable’s repudiation of the Tobin tax but, instead, he has proposed a tax on bank profits to help provide a sort of insurance premium to pay for the losses banks impose on the taxpayer when they go bust. It would be better to have other reforms to ensure that a “no bail out” pledge can be made credible, but let’s assume that we are starting from here, what is wrong with Vince Cable’s proposal?

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