Britain will not support a Europe-wide tax on financial transactions, chancellor George Osborne is to tell EU finance ministers at a meeting in Brussels.
France and Germany are in favour of the financial transactions tax (FTT) proposed by the European Commission for all 27 EU nations, but the UK believes it would hurt traders in the City of London. Leaders in Paris and Berlin are keen to show taxpayers that they are working to ease the burden of bailouts on public finances.
However, Osborne believes an FTT could threaten the interests of the City and drive investment out of Europe. The chancellor would only consider an FTT if it was implemented on a global basis to keep a level playing field.
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Osborne’s position on an FTT is supported by prime minister David Cameron, who insisted the tax would risk damaging the UK’s national interests unless it was rolled out across the world. There are concerns implementing an FTT would see traders move from London to financial centres in the US and Asia.
Cameron said: “I’ve been clear all along that we are not opposed in principle to such a tax if one could be agreed on a global level. But we will not unilaterally introduce a new financial transactions tax in the UK and neither will we support its introduction in the European Union unless it is part of a global move.
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“Britain has introduced a bank levy and we are meeting our global agreements on overseas aid. If other countries want to introduce new financial taxes at home, including to raise revenue for development, that is for them to decide. But what they should not do is try to hide behind proposals for an EU tax as an excuse for political inaction on meeting targets, whether that is for spending on development or indeed climate change.”
Cameron added that there is so much discussion of which way the revenues from an FTT could be spent that it “would be a bit of a stretch even for Robin Hood”.
Labour leader Ed Miliband said his party would back an FTT if it was put in place “in all the major financial centres”, but that Cameron’s comments were “hardly a ringing endorsement” of the idea. Miliband asked Cameron if he had “argued for a global transactions tax” and if so, what steps he would take to push it through.