“FAIR SHARES” PLAN
Q. WHAT’S THE PLAN?
A. The idea is to privatise the government’s 83 per cent stake in RBS and its 41 per cent stake in Lloyds by divvying up the shares and giving them to taxpayers. People would not have to pay for them up front but would pay a floor price to the Treasury whenever they sold on the shares. The floor price would be set at a break-even level to allow the state to recoup the £66bn cost of bailing out the banks. But any upside beyond that price would be kept by taxpayers and taxed at capital gains rates.
Q. WHY TAX THE GAINS?
A. Taxing the upside would allow the government to collect a portion of the windfall if there were big gains after it offloaded the shares. It is a sweetener for the Treasury, essentially.
Q. ISN’T THIS WILDLY IMPRACTICAL?
A. Not necessarily. The technology to administer massively complex and large-scale trades already exists – it is simply a matter of buying it for the right price. The scheme’s creators, Portman Capital, put the cost at £250m.
Q. WHAT ABOUT WHEN 40M PEOPLE SHOW UP TO THE AGM?
A. The shares in question could have voting rights but not attendance rights, and would be held in accounts administered by a nominee. Portman Capital’s Michael O’Connor also suggests that less sophisticated shareholders could have their shares administered electronically by a nominee.
Q. WHAT IF WRECKERS TRY TO DESTROY THE BANKS BY VOTING FOR FOOLISH MEASURES?
A. Given that they would destroy the value of their own property, hopefully that wouldn’t happen!