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Big banks should be broken up, not taxed

A Tobin tax would only work by destroying financial activity. The government must instead break up large banks and regulate them better

By George Magnus   September 2009

Read our other exclusive online responses to Adair Turner from Tim Congdon, Oliver Kamm and Robert Kuttner

FSA chief Adair Turner’s willingness to consider taxes on financial transactions, or a Tobin tax, to rein in the financial services industry has provoked a furore.

Much of the debate has, naturally, surrounded pay and bonuses. But to focus on compensation is to miss the bigger picture about how to control credit booms and finance in the first place. Turner is well aware of this. When he referred to possible Tobin taxes, he did so before saying “if increased capital requirements” are insufficient. Moreover,…

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