A research report prepared for the City of London Corporation has estimated the cost of the proposed European Financial Transaction Tax (FTT) on UK government debt at £4 billion, with further costs for company debt.
Even though the UK is not taking part, bonds issued by our government and companies are traded in EU participating countries and will therefore be subject to the tax. This will raise government spending and the cost of capital and investment.
MEP for London, Sarah Ludford said:
The once-called ‘Tobin Tax’ was supposed to be the magic bullet for deterring financial speculation and raising money for good causes. But I’ve consistently opposed it in the European Parliament as I have never been convinced it was that simple. According to the EU Commission’s own impact assessment the FTT will cost jobs and growth in Europe.
Even though the UK Government rightly opted out of the FTT, this new evidence shows we are far from immune from its effects. London can ill afford to take the hit on its economy and lose jobs. The cost will also be passed onto ordinary Londoners as taxpayers and through more expensive mortgages and pension funds. Such a tax can only work if it is global and genuinely targeted at speculative finance instead of normal transactions.
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