By describing opposition to a transactions tax on banks as “morally bankrupt”, Chris Bain of Cafod (Report, February 26) makes the mistake of raising issues that are clearly reserved for prudential judgment to a moral status they do not deserve. I do not regard myself as morally bankrupt because, in good faith, I am suspicious of such a tax.
Without being morally bankrupt, it is possible to genuinely believe that a transactions tax on banks will lead to further complexity in the banking system – as banks try to avoid the tax – and will ultimately be a tax on bank customers and not on their profits.
Furthermore, it is also interesting to note that the securitisation markets and transactions that have brought such trouble arose in the first place because people of Chris Bain’s political views created the large mortgage giants in the US in order to promote home ownership among the poor. Intervention has unintended consequences.
As well as this pragmatic view, it is also possible, without being morally bankrupt, to hold the view that banks should be held financially responsible for their mistakes by ensuring that there is a better mechanism for winding banks up and that this is the key reform of the banking system that is needed. Banks will then no longer be a risk to the taxpayer. If this is done, banks will take fewer risks and the rationale for a so-called “Robin Hood tax” will disappear.
The laity continue to be ill-served by Catholic agencies in the western world that cannot distinguish between subjective political issues reserved for prudential judgment and objective moral issues. There seem to be too many mis-classifications in both directions.
See also Catholic Social Teaching and the Market Economy.