It's the symbolism, stupid
When a tax rise is announced outside of Budget time (see my previous post), it's fair to assume that the announcement may have as much to do with politics as it is about economics. When you're raising less than a billion pounds that impression is bound to be reinforced.
The Tories bashed the banks in opposition to symbolise that "we're all in it together". Now, Labour in opposition are using ministers' failure to curb banks bonuses to back up their assertion that that claim is hollow.
At Prime Minister's Questions last month Ed Miliband accused the PM of living on "Planet Cameron" where taxes went up for ordinary people and down for the banks. "The country" he said "is getting fed up with the prime minister's pathetic excuses on banks". David Cameron accused him of bailing out the banks and asking for "nothing in return".
Labour's aim is to "re-contaminate" the Tory brand. George Osborne's objective today was to make that just a tiny bit harder.
It's not really a clash about the banks or the economy. It's about the symbolism, stupid.
Update 11:00: The Treasury insists that the George v Ed show had nothing to do with the timing of today's tax announcement. The reason for the curious timing they say was the need to ensure that any commitment the banks make to increase lending under Project Merlin is not threatened by their reaction to a tax increase announced after the deal was done.
The message now to the banks is "you know where you stand" - if you deliver on loans, bonuses and transparency you are guaranteed a stable and predictable tax environment with no nasty tax surprises around the corner. On the other hand, if you don't deliver "nothing is off the table".