TIME TO BIN THE TOBIN TAX
While the UK veto on the Financial Transactions Tax (or “Tobin Tax”) is solid, an FTT could still cause significant damage to the UK financial services industry if it is introduced –as is being planned – by a group of eurozone countries, warns renowned international tax expert John Chown.
Published to coincide with a high level, cross-party online web seminar on the subject– speakers including Andrew Tyrie MP and President Barroso’s former special adviser, Roger Liddle (see http://tobintax.theinformationdaily.com/) – John Chown demonstrates the flaws in the arguments in favour of an FTT:
- it would not enhance market stability
- it would not curb “undesirable financial activity”
- it would not raise substantial funds for various “good causes”
- its burden would not fall on bankers and financial traders but on pensioners, employees and consumers
- Its impact would fall disproportionately on the UK.
But he also shows that if an FTT were introduced under enhanced co-operation –as is currently being planned by France and Germany – UK branches of French and German financial institutions could be fully liable to an FTT on all transactions. Even subsidiaries of German and French financial institutions could be affected if it were shown that the risk in any transaction had been passed back to the parent company.
In addition, any legislation for an FTT (whether on an EU-wide basis or within a set of member states) will be enormously complex; and will be subject to many years of legal dispute (which would probably have to be settled at the ECJ). The resulting uncertainty could only be severely damaging to the UK financial services industry.
He concludes that it is therefore essential that the UK uses every possible method to ensure that an FTT is not introduced at any level in the EU.