As recriminations fly over the world's banking crisis, the role played by flawed tax policy may not escape scrutiny for much longer. Tax breaks that encourage debt and risk-taking may not be the prime cause of the conflagration but there is plenty of evidence that they added fuel to the blaze.

The most notable example of this is the US tax breaks for home ownership, which are particularly generous by international standards. They have created an incentive for homeowners to remortgage repeatedly, so that even some long-standing home owners have been left with little equity cushion.