|Source Wiki/Time Magazine|
Finance Directors should perhaps take note of history. George Santayana, the Spanish philosopher, said “those who cannot remember the past are condemned to repeat it”. In 1972 Edward Heath’s Government put a freeze on dividend payments. We hope it won’t come to this, but, for a cash-strapped government facing the financial inertia of a corporate sector which has been given support by that most benign of monetary policies, it must be tempting for the Chancellor to consider a tax charge on retained corporate cash above, say, a proportion of a company’s equity market capitalisation.
At the very least, such a threat might persuade a less passive financial approach by some companies and provide that essential lubrication of liquidity which the banks, today, are patently failing to offer.
Divisional Director - Edinburgh