Osborne criticises financial transaction tax as agreement moves closer

The chancellor George Osborne has criticised the impacts of and the lack of information around the EU financial transaction tax (FTT), after it was revealed some member states had reached an agreement on the controversial proposal.

Ten countries, including Germany and France, have agreed to implement the levy by January 1 2016. The final details have yet to be agreed upon but it is likely that the trading of shares and derivatives will be affected.

The chancellor said, “Our view has been that the financial transaction tax that people have talked about is not a tax on bankers as people present it. It’s a tax on jobs, it’s a tax on investment, it’s a tax on people’s pensions and pensioners and that it why the United Kingdom does not want to be part of it.”

The FTT would see some types of trading between financial institutions being taxed, even if only one of the institutions resides in a participating country. It aims to discourage speculative trading.

Osborne’s comments follow the rejection of the UK’s legal challenge to the FTT, which is often referred to as the Tobin tax or Robin Hood tax. The government has threatened further legal action.

The chancellor added, “We need to hear more about what is being proposed, and it is up to member states to decide whether they want to damage jobs and investment in their own economies but if they seek to damage jobs and investment across the rest of Europe, then we’re entitled to challenge that.”

David Hillman, spokesperson for the Robin Hood Tax campaign, which supports the FTT being adopted in the UK, commented, “It’s good news that so many countries remain committed to the FTT – they are standing up to their financial sector and will ensure that banks make a contribution for the economic damage they caused.

“As the details are hammered out leaders must ensure bank lobbyists do not succeed in seeing this tax watered down. Derivatives must be included. It’s a shame the UK government has succumbed to the City’s slick lobbyists and is fighting a tax that could raise billions for those worst hit by the crisis at home and abroad.”

Those opposing the FTT say the scale of the financial services industry in the City of London could lead to the tax have a negative impact on investment and businesses.

Speaking to Blue & Green Tomorrow, Simon Chouffot from the Robin Hood Tax campaign said, “Far from the size of the UK’s financial sector meaning we have the most to lose from an FTT, it means we have the most to gain.

“It could raise tens of thousands of billion of pounds that could avoid the worst of the cuts and help ensure we live up to our international commitments. It is only right the financial sector pays for the damage it caused.”

Photo: Andreas Poike via Flickr

Further reading:

UK’s legal challenge to EU financial transaction tax rejected

EU Financial Transaction Tax ‘needs to respect EU treaties’, says Law Society

Robin Hood Tax: ‘Turning a global crisis into a global opportunity’

Bill Nighy calls for a Robin Hood tax to create an ‘Aids-free generation’

Government must do more to make finance sustainable, say MPs