Member News
By Tony Grew - 18th August 2011
A group that promotes the UK's financial and professional services industry has warned against a proposed European transaction tax on financial trades.
The tax was suggested by French president Nicholas Sarkozy and German chancellor Angela Merkel at a summit on Tuesday to discuss turbulence in the Eurozone.
Chris Cummings, CEO of TheCityUK, said any financial transaction tax, also known as a 'Robin Hood tax', would be "especially damaging" for the UK.
"London has long been the global capital of many trading activities – for instance London has 37 per cent of global FX trading, 46 per cent of global interest rate OTC derivatives trading and 19 per cent of foreign equities trading.
"That lead would be truly challenged were the tax imposed - regulation must be thought through in order to preserve this leading global position."
Cummings claimed a transaction tax would threaten EU and UK competiveness.
"It would provide the catalyst for trading firms to move away from the EU to other jurisdictions where this tax is not imposed," he said.
However, Unicef UK has backed the proposal.
"Money raised from a financial transaction tax could help millions of children living in poverty in the UK and around the world and make sure promises are kept on climate change," said Alison Marshall, director of public affairs at Unicef UK.
"This is a major step forward by France and Germany and the UK government needs to follow their lead.
"The UK’s stamp duty proves that an FTT is possible; the government should take up this chance to make a real difference to the lives of children."
In March the European Parliament voted to support a resolution calling for the introduction of an EU-wide tax of 0.05 per cent on every financial transaction that goes through a European institution.
Responding to the Sarkozy/Merkel proposal, a HM Treasury spokesperson said: "The government will continue to engage with its international partners on financial transaction taxes.
"But any financial transaction tax would have to apply globally – otherwise the transactions covered would simply relocate to countries not applying the tax.”
Dods Parliamentary Communications Ltd
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