George Osborne has dismissed the idea of a financial transactions tax, telling EU ministers in Brussels that it would “drive a major global business out of the European continent”.
The chancellor said he was in favour of a global financial transactions tax, also known as a Tobin tax, but that it was very unlikely to be introduced. Osborne said it was “fanciful” to believe the US, China and Singapore would sign up to such an agreement in his lifetime.
Osborne told EU finance ministers that figures from the European Commission had acknowledged that a European financial transactions tax would see a great deal of business move abroad, while hundreds of thousands of jobs would be lost.
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The chancellor’s stance on the so-called Tobin tax is not a revelation – his comments were anticipated earlier this week – but he has now announced detailed statistics and research on the financial transactions tax.
He said: “The commission itself points out that a European financial transactions tax would have a serious impact on European growth, it would hit the UK economy, it could reduce European GDP by up to 3.5 per cent. But the commission takes the central view that its only going to reduce European GDP by 1.76 per cent, that’s a central estimate, and it is going to cost half a million jobs across the European continent.”
Osborne continued: “The commission also estimates that 70 to 90 per cent of all transactions will leave the European continent as a result. We are talking about something that is going to push a major global business out of the European continent.”
The chancellor suggested that time would be better spent discussing “what is in effect a crisis in the European economy”, as the eurozone debt crisis was in danger of spreading from Greece to Italy.
Osborne said “there is not a single banker in this world that is going to pay this tax” and suggested that the bill instead would be footed by pensioners and taxpayers across Europe.
Finance ministers from the Netherlands, Italy, Luxembourg, Sweden and the Czech Republic also expressed concerns about the impact of a Tobin tax on the European economy.
Osborne concluded his speech by accusing some finance ministers of “not being honest” about how the revenue from financial transactions tax would be spent. He said: “Even if all the business didn’t leave the European continent and we could actually collect this tax, this money has been spent four times over by the people around this table.”
However, German finance minister Wolfgang Schauble said Osborne’s views were “just an excuse for doing nothing”. He added: “We will wait 20 years before doing anything if we wait for the last island on this planet.”