A European financial transactions tax will not be forced on the UK, a senior EU figure has claimed.
EU single market commissioner Michel Barnier said it was right that the financial sector pays its fair share as he defended the European Commission’s proposed tax on bond, share, derivative and foreign exchange trading.
Speaking at the City of London’s Guildhall, Barnier said the financial transactions tax – also known as a ‘Tobin tax’ – “won’t be imposed on the UK against its will”.
He said: “It is right that the financial sector – massively bailed out by taxpayers – pays a fair contribution to help us face up to global challenges.”
But Barnier’s words contradict his colleague, the EU tax commissioner Algirdas Semeta, who told the Financial Times that Britain would have to pay an EU financial tax whether it wanted to or not.
Semeta said the UK would miss out on the revenues raised by the tax if it stayed out of the agreement, money which could significantly reduce its contribution to the EU budget.
The proposed Tobin tax has divided Europe and is greatly unpopular in the City of London. The UK and Sweden are opposed to the proposals and fear it would just drive trade to Hong Kong, New York and Zurich unless the tax was enforced around the world, but France and Germany are keen to push it through.
Prime minister David Cameron wielded the UK’s veto of a “fiscal compact” at an EU summit last month when he could not secure safeguards for the City of London, forcing the EU’s other members to write a separate treaty. However, Barnier said the EU leaders were “right to reject the so-called ‘safeguards’ in financial services”.
Barnier said the safeguards “would have reintroduced a dose of unanimity in decision-making in the single market” and would ultimately undermine the project.
The Frenchmen did have some complimentary words for the Square Mile, which he referred to as “one of Europe’s key assets on the global stage”, and he insisted there was no “plot to undermine the City”.
He added: “The EU must not hinder the City’s energy. But I am sure it is in the City’s interest and the wider British interest, to play the European game.”