Britain will be left behind if it doesn’t support the financial transaction tax

It's time Britain joined the other major economies of Europe in introducing the Financial Transactions Tax to help pay down the deficit. The other option is to continue to cripple its poorest citizens.

Once upon a time, the financial transaction tax (FTT) was the stuff of legend, supported only by radical economists and written off by the European Commission as unfeasible unless introduced on a global scale.

But now, with 11 member states moving forward with the Commission’s ambitious plan to place a 0.1 per cent tax on transactions in shares and bonds transactions and a 0.01 per cent tax for derivatives, with robust anti-avoidance measures built in to compensate for the lack of EU-wide agreement, the world is set to see the first working model of an international FTT.

It is significant that four of the EU’s five biggest economies are set to introduce the tax in 2014. But the UK, home to the EU’s largest financial sector, is conspicuous in its staunch opposition.

George Osborne has written the EU’s FTT off as “economic suicide”, but his alternative is an attack on Britain’s poorest people.

Next month, the under occupancy charge – erroneously but evocatively described as the “bedroom tax” – will make 660,000 people living in social housing £728 per year worse off, according to Department for Work and Pensions estimates.

The charge, to be deducted from the benefits of those in houses with one or more unused bedroom, will fall disproportionately on disabled people and single mothers. Even the most cold hearted apologist for austerity would struggle to make the case that these people got Britain into its current economic mess.

Meanwhile, Osborne is giving handouts to the richest individuals and biggest companies by abolishing the 50p tax rate and introducing ever larger corporate tax cuts, whilst he has raised the cost of living for the poorest families by raising VAT.

The chancellor’s priorities are all wrong.

Instead, he should be looking to the source of the financial crisis to help raise the revenue necessary to offset an austerity drive that has the country teetering on the brink of a triple-dip recession and to invest in infrastructure and housing projects which will provide homes for the poor, jobs for the unemployed and kick-start the economy.

The advantage of the FTT is that despite miniscule rates it could bring in £10 billion a year for the British economy. Instead of placing the huge burden of reducing the deficit on the weakest backs, it spreads a light load across the strongest.

Crucially, it will also help to discourage some of the kinds of risky transactions that helped cause the crisis in the first place. Meanwhile, it will go some way towards recouping from the banks the cost of the bailout and can be used as an insurance fund against future bail outs.

While Osborne remains stubbornly opposed to exploring the benefits an FTT can bring, Labour have begun to make the right noises about it.

Writing in the Guardian this week, Chris Leslie, shadow financial secretary to the treasury, said that the time is now right to start looking seriously at the FTT.

Leslie stops short of calling for the UK to join the 11 countries looking to introduce the FTT next year, however.

“We support a financial transaction tax with the widest possible global participation. London and New York City are the two largest global financial centres – and if they are to enforce a financial transaction tax, ideally both will need to move in concert,” he writes.

But if global tax policy moves at the pace of the slowest countries, little will be achieved. The Commission itself initially ruled out an FTT that was not global. But as Manfred Bergmann, the FTT’s architect, told me, EU countries simply needed the money and it was time to “lead by example”.

It’s time Britain joined the other major economies of Europe in introducing the Financial Transactions Tax to help pay down the deficit. The other option is to continue to cripple its poorest citizens.

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46 Responses to “Britain will be left behind if it doesn’t support the financial transaction tax”

  1. LB

    Lets tax ATM withdrawals. It’s a financial transaction.

    Billions are withdrawn from ATMs all the time.

    Meanwhile I notice you spouting the usual crap about “Pay down the deficit”.

    You can’t pay down a deficit. It’s spending money you don’t have. There is no paying off anything, just debt inexorably rising.

  2. JoeThorpe1963

    What utter rubbish this article is! who can you collect a Transaction Tax from a banks based in Singapore, Bermuda or Hong Kong? because that is where they will relocate their trading desks to & on top of that we will lose the revenue that we generate in normal taxation. We already have stamp duty you cannot squeeze blood from a stone, why dont we have a transaction charge for cars? they pollute the planet & clog the streets they have enormous factories churning out gases, they wreck the countryside extracting the steel not to mention rubbers, plastics etc etc but no the FTT is an easy attack on the City of London because it wont affect 25 of the countries in the EU & as is usual the lefty subsidy junkies want something from someone else. Finally after 40 years people are realising we are better off out!

  3. John Whittaker

    I hope I’m wrong about this, but I’m under the impression our debt, despite or because, of austerity is still growing? Clearly we need to do something about it, if so and taxing those most able to pay it seems the most logical choice.

    One fact is that our tax laws are out-dated as it took some time for tax avoidance schemes to even be noticed, and they were, as I recall, legal. That says to me rather than naming and shaming we should write better laws.

    As for driving business away, VAT was accused ot doing the same thing and it didn’t. Britain is a good place for financial transaction for a host of reasons above and beyond simple cost. Othersie a lot of head offices would have headquarters in places like Sao Paolo, Saigon or Dhubai.

    Also, can we not encourage the return of our manufacturing? I seem to recall from my history that, before Maggie milk-snatcher we had quite a bit of it?

  4. John Whittaker

    It was the conservatives brought us in. They liked the open markets. I imagine they still do. We do tax cars. Heavily. Petrol too. Further taxes on automative transport would push spending of the middle class even further down, depressing the economy yet further. We need a tax which doesn’t impact the spending power of the majority of the country or schemes which increase their spending power without affecting government revenue’s. I believe that second was the idea behind the abolition of the 50p tax, though a very unpopular move. Let’s hope it’s successfull

  5. Newsbot9

    Trying to play to manufacturing rather than what we do well isn’t perhaps the best idea.

    (We do in fact have quite a bit, but it’s small/medium shop stuff in higher margin areas, not factories)

  6. Newsbot9

    Yes, keep trying to tax the poor. And keep denying revenue generation in the economy. Your austerity is designed to destroy it, but it’s an ideological choice. Purely so.

  7. LB

    Those university cuts are hitting home them.

    What is it? Mejah studies being axed?

  8. Newsbot9

    Ah yes, you’re calling a fat pig a stone, and making excuses.

    And no, people are not backing your campaign to destroy the economy. Because among other things, we’d lose the city anyway when Europe put us on the outside of a higher tax for dealing in EU companies.

  9. hfgjgtttyty

    this tax will only work worldwide as the banks will just move to the US or China. Another attempt to destroy the city by the EU so it can have even more control

    Sign this petition to restrict Bulgarian and Romanians from entering the UK:

    http://epetitions.direct.gov.uk/petitions/41492

    Over 84,500 signatures

  10. Newsbot9

    The hard science you hate so much. Engineering. That sort of subject.

    And keep attacking the media industries, they earn cash for the UK, can’t be allowed in your world – they’re holding salaries up!

    Why do you think devastating the Universities, especially the red-bricks, is a good idea?

  11. LB

    Far from it. All in favour of Engineering, chemistry, physics, maths, land economy, …

    Not in favour of what mejah studies has become.

    So what is it? Mejah studies being axed and your job on the line?

  12. Newsbot9

    So you’re in “favour” of the subjects being axed. So smart of you. Even though you slipped in the mythical land stealing in there.

    And no, the Universities I work for are the ones doing fine. I teach in creative media, in a growing topic, and may well have a PhD studentship. It’s the redbricks which are in trouble.

  13. Newsbot9

    Yes, keep on arguing magic math, when you’re trying to drive the City out by putting up trade barriers to it’s function. Keep spamming your sabotage-link!

  14. JC

    Given the uncertainty about the FTT working in any way at all, wouldn’t it be a good idea to observe what it achieves in the rest of Europe before committing ourselves? If it is a success, then we should join in and take advantage of that. If it is an abject failure like the Tories say, then we can decide not to join in.

  15. Mick

    The Left’s answer to everything is tax. Labour almost made themselves unelectable partly through their lust for high taxes.

    It wasn’t until Tony Blair moderated this death wish that the country actually had taxes levied at a halfway reasonable level under Labour.

    Now David Cameron ponders so-called unfunded tax CUTS. Yup, the workers the Left crow about should hopefully pay less again without being hammered some other way to ‘pay’ for it. It’s what Mrs. Thatcher said and it can be pulled off with flair – if done right.

  16. henrytinsley

    This Bulgarian petition is a bit slow in spite of trolls trying to promote it. 38 Degrees has just got over 340,000 signatures protecting against Hunt’s latest ploy to privatiise the NHS.

  17. fsvsd

    i don’t think a privatised NHS would have slaughtered 1% of the population of Stafford in 4 years.

  18. stu

    PhD in ‘creative media’! what a load of w#nk. go and get a proper job you scrounging parasite. people have to work hard and pay taxes to let you live high on the hog doing f#ck all of any worth.

  19. Newsbot9

    That’s right, how dare I be a professional in a rapidly expanding field and be interested in a PhD.

    And yes, people like me work and parasites like you live off unearned income and corporate welfare. Keep thinking your casino Banking is work!

  20. Newsbot9

    No, a lot more would have died thanks to not being to afford treatment. As happens in America. Your point?

  21. Newsbot9

    Tax is historically very low, but don’t let the facts stop you!

    And no, the hammer is being used on the poor. Repeatedly. It’s killing the economy. Keep calling starving people and slowing the economy further “doing it right”.

    Triple dip denial there. Keep on reinforcing failure.

  22. Newsbot9

    At that point we’ll have lost the city.

  23. Mick

    Hiostorically low only to a mutualist, who likes to enjoy reading Proud’s words on ‘labour vouchers’ instead of money and a 50% wages tax too.

    And tax cuts are popular with the voters. Less in tax means more money to save away and gain interest. There are very good savings plans nowadays, and should continue to be if they’re not limited by things like higher taxes on them.

  24. Newsbot9

    Historically low to anyone who isn’t a revisionist.

    You’re the one who is trying to replace money for the poor, and I see wage cuts for everyone else now.

    And no, raising the poverty premium by slashing services means that demand falls. “Very good” saving plans, right…all the savings accounts outside ISA’s have lost cash after the last 10 years. loltax…you don’t understand the basics, the problem there is interest rates.

  25. Mick

    ‘Revisionist’ seems a peculiar insult to the Left. In Soviet Russia, people were locked away for that ‘crime’. And in Newsbot’s world, labour vouchers may seem to hold a consistent value compared to real money. But only in the way Monopoly board money does compared to real money.

    And yes, a government must keep interest rates down to boost growth. Easier said than done but that’s the ideal.

  26. Newsbot9

    Nope, you’re just perculiar. How dare I use an accurate description of your revisonism.

    And I see, you’re doing to devalue your magic replacement vouchers for the poor. And thanks for showing you don’t have a clue about what interest rates are.

  27. Mick

    ‘Perculiar’. And the R-bomb again! Oooooh, the pain of being called that!

    Comedy gold, you’re the maestro.

    Though to try and be serious with Newsbot for a minute, let me ask him the value he’d peg interest rates at.

  28. Newsbot9

    Nope, I’m not for bombing anyone, unlike you. Keep calling yourself funny.

    And 2%, at present.

  29. Mick

    Well you’re in luck. The Bank Of England, according to this, pegs it at 0.5%.

    http://www.telegraph.co.uk/finance/economics/9915122/Bank-of-England-holds-interest-rates-and-QE-reaction.html

    Life’s not all that bad.

  30. Newsbot9

    0.5% is not 2%. Keep on making it up.

  31. Mick

    You told me you’d peg it at 2. The Telegraph says it’s actually 0.5.

    Poor little Newsbot.

  32. Newsbot9

    Nonsense denial again. Keep on trying to say that I should rejoice, when it’s not what I’d put it at. Too low is just as bad as too high!

  33. Mick

    Yeah, how dare people pay far too low a rate for mortgages and stuff!

    And there was I thinking the mutualists cared!

  34. Newsbot9

    It’s sustained low value is having a lot of negative effects on the economy. But details!

  35. Mick

    Well don’t bellyache at me when those wise movers-and-shakers at our national bank hold all the keys of knowledge on this one.

    It’s about as good news as you can get when things like annuities could have been more expensive. And with tax cuts supposedly on the way, the Tories could perhaps look set to be properly riding the recession they inherited.

  36. Newsbot9

    The annuities which give already scam returns thanks to massive fees and so on? And yes, the further revenue cuts and socialising of costs onto poor mean they’ll be riding the triple dip they caused, after having inheriting a recovering economy, into the ground.

  37. Mick

    Newsbot knows annuities are vital options to keep people stable, especially in old age and is just one real-life option the anarchists couldn’t hope to successfully replace.

    Not without such significant economic ripples that we’d be in constant recession, one worse than the one Tories inherited and one next to impossible to get out of. Slumps across the board.

    Yeah, inherited: http://www.telegraph.co.uk/comment/personal-view/3563022/Labour-cant-fix-Gordon-Browns-recession.html

  38. Newsbot9

    Keep claiming you control me.

    And keep claiming that people never seeing the money they paid into a pension back, despite bankers raking in fees for years, isn’t a problem. I’d not try and “replace” a scam, no, scams are scams. Defined returns are the only way to go.

    Keep lying about the growing economy the Tories inherited (the article dip gives your game away). And we’re about to triple-dip because of your precious Tories.

  39. Mick

    Newsbot will never calm down as he won’t be advised. Which is common amongst cranky anarchists, who usually cause mayhem on the streets as a result.

    And as companies forced to choose between honouring pension plans or investing in growth, this just makes poor little Newbot’s bitching about annuities even more dangerous. You need every help.

    And triple-dip? Oh poor poor Newsbot, you’re so behind the times:
    http://www.guardian.co.uk/business/economics-blog/2013/mar/05/triple-dip-recession-prospects

  40. Newsbot9

    You’re the rager, not me, and keep talking about your fanatics.

    And of course you think it’s fine for companies which rip off the taxpayer to keep right in going. Of course you think suppressing growth and wages is worth the cost.

    And keep talking about speculation it won’t happen.

  41. Mick

    I’ve been perfectly calm. It’s Newsbot and Co who need to calm down dear. But mutualists are as mutualists do, living in a world of illusion.

    And poor little Newsbot looks like he was lying when he predicted the triple-dip, as well as being hypocritical to say he wants low interest rates to encourage growth at the same time as he blames ‘my’ low interest rates for suppressing it!

    Oh poor little Newsbot!! No wonder the anarchists are outshone at the polls by the BNP, even now.

  42. Newsbot9

    Yes, your stance chanting your mantra vs reality is “calm”. And keep repeating your collectivist nonsense.

    Keep on saying that predictions are reality. That explains your triple-dip denial. Keep making up nonsense you’ve invented about interest rates too.

    And really, you think your BNP do better than 20+ MP’s. Denial, as usual, from you.

  43. Mick

    Oh poor little Newsbot. Poor poor poor poor poor poor poor poor poor poor poor Newsie-wewsie woo woo woos. CALM DOWN dear!

    You predicted a triple-dip. Then I showed you how experts predict it will be avoided. No we wait and see.

    And oh Newsie Newsie. And those 20 MPs aren’t anarchist nurks like you mutualists are they? They’re MPs amongst the mass ranks of Labour and they put Milliband’s policies first.

  44. Newsbot9

    Keep raging away.

    And yes, they’re mutualists. Keep up the denial.

  45. Mick

    Hardcore anarchists like Newsbot are far away from even the likes of Ed Balls who, despite his crap, wouldn’t dare to issue labour vouchers and levy a 50% wages tax.

    Cos that’s the thing with anarchists – they’re such accomplished losers that they can never get anywhere on their own and have to try and latch onto someone else’s success to feel good. They have no true MPs to call their own, just a few Co-operatives they like to think are them.

    Anarchists even rank below the NF and BNP because those two organisations now renounce violence and confrontation. Anarchists still revel in it because that’s the only bargaining power they think they have left.

  46. Newsbot9

    Keep talking about your plans. Not mine. Thanks for admitting you’re a loser.

    And lol, yea, you keep saying your thugs are not really thugs.

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