FURY AS EUROCRATS VOTE FOR TOBIN TAX
EUROCRATS have moved a step closer to imposing a devastating tax on the City, sparking condemnation from industry groups.
In a bid to boost Brussels’ budget by five per cent, the EU Parliament has voted to slap a Tobin, or so-called “Robin Hood” tax, on all financial transactions that pass through the City.
The Association for Financial Markets in Europe (AFME), a regional industry body, yesterday condemned the move, which would add to a mounting burden of regulation that is due to swamp the financial sector over the coming months.
AFME chief executive Simon Lewis said: “Calls for a financial transaction tax are being made against the backdrop of several significant new taxes or levies already being introduced by individual member states.
“Before raising new taxes on the sector, policymakers need to have accurate data about the tax contribution it is already making, to avoid making decisions in the dark.”
The tax would levy a 0.05 per cent fee on the total value of “every type of financial transaction” that goes through any institution in Europe, pushing up the cost of economic activity at a time when the region is struggling to stage a convincing recovery.
It would hit the foreign exchange markets particularly hard, a trade in which London is a global leader.
The EU parliament wants to impose the tax in order to raise €200bn (£172bn) to fund increasing spending from 2014 onwards.
It also claims the tax will combat poverty and climate change and “tackle the highly damaging trading patterns in financial markets, such as some short-term and automated high-frequency trade transactions, and curb speculation”.
The parliament voted in favour of the budget rise and accompanying tax 397 to 246, by a lesser margin than the 529 to 127 by which it voted in favour of the tax in March.
The vote requires member states’ consent through the European Council to become law, but this second vote will ratchet up the pressure on the European Commission to consider ways of imposing the tax.
Syed Kamall, Conservative MEP for London, said: “The EU parliament’s vote in favour of a transaction tax is particularly disappointing given that they did not even wait for the European Commission’s initial impact assessment before making their decision.
“Unilaterally imposing the tax would send financial activity to lower cost destinations outside the EU and damage London’s attractiveness as a financial centre.
“And banks would simply pass on the costs of the tax to their customers, hitting savers and investors.”