Anthony Hilton: A financial transactions tax may not be so bad
Saturday 26 May 2012
It was interesting to hear the Prime Minister come out so forcefully against a financial transactions tax (FTT) when talking to the media after Wednesday's European summit meeting. It was a bad tax which would destroy competitiveness, weaken pension schemes and destroy jobs he declared, and he would do everything he could to block it.
This is, of course, the same David Cameron who applauded loudly in the Commons a few weeks ago on Budget day when his Chancellor announced plans to clamp down on those who sought to avoid the UK's own financial transactions tax.
We call it stamp duty but it is still a tax on financial transactions, and one which is massively more onerous and arbitrary in its impact than anything proposed by our Continental cousins. Yet there was no mention of the loss of liquidity, jobs and competitiveness as the Chancellor told us how he was going to crackdown on unscrupulous foreigners who avoided British stamp duty when buying UK property.
Meanwhile, the stamp duty on share purchases is now so much part of the furniture that even the Stock Exchange no longer campaigns vigorously for its removal.
There may well be a reason to bat away the FTT, but it needs to be given more thought. It may damage the economy but others which have one include Hong Kong, Switzerland, South Korea and, amusingly, The United States, and it does not seem to have done them irreparable harm.
Also, at the level proposed – 0.1 per cent – it would be as nothing compared to the normal fees charged by banks and fund managers. And if, as some critics point out, it would make elements of City trading unprofitable, you have to ask whether this matters. If the profit on a deal is so small that a 0.1 per cent tax wipes it out, it does not seem a particularly valuable activity in the first place. If, in contrast, a deal does have economic value, a tax of 0.1 per cent, even if levied several times over in a chain of activity – is surely not going to stop it taking place.
Third, having an FTT might allow for relief elsewhere. If it did indeed raise the £8bn projected, that would allow for a corresponding tax cut – a reduction of VAT perhaps, or a cut in corporation tax to 18 per cent – which might give the economy a much-needed boost and help the rebalancing away from finance, which I think is still government policy.
- 1 Half of young women unable to ‘locate vagina’ and 65% find it difficult to say the word
- 2 Perez Hilton apologises for Jennifer Lawrence naked photo leak
- 3 A teacher speaks out: 'I'm effectively being forced out of a career that I wanted to love'
- 4 Mexican woman becomes world’s 'oldest person' at 127
- 5 Jennifer Lawrence 'naked sex video' will be leaked threatens 4Chan celebrity photo hacker
Perez Hilton apologises for Jennifer Lawrence naked photo leak
Ariana Grande nude photos leak: 'These are completely fake' say singer's representatives
A teacher speaks out: 'I'm effectively being forced out of a career that I wanted to love'
Israel to appropriate 400 hectares in West Bank for ‘state use’
Kate Upton nude pictures leak: Model's representatives 'looking into' authenticity of naked images
Rotherham child sex abuse scandal: Labour Home Office to be probed over what Tony Blair's government knew - and when
Robin Williams Emmys tribute led by Billy Crystal criticised for including 'racist' joke about Muslim woman
The Rotherham child abuse scandal is a tale of apologists, misogyny and double standards
What do immigrants really think of Britain? Polish immigrant's Reddit post goes viral
Do you realise just how foolish the UK looks?
Ashya King: Parents of five-year-old boy refused permission to visit him in hospital and denied bail at Spanish court
iJobs Money & Business
£40000 - £50000 per annum + benefits+bonus+package: Harrington Starr: SQL Impl...
£85000 per annum: Harrington Starr: Head of IT (Windows, Server, VMware, SAN, ...
£40000 - £50000 per annum: Harrington Starr: You will not be expected to hav...
£500 per day: Harrington Starr: SQL DBA/Developer SQL, C#, VBA, Data Warehousi...