Where does David Cameron find the evidence that, according to the European Commission, a financial transaction tax (FTT) would cost “hundreds of thousands of jobs”, that “you end up putting up the costs of people’s insurance policies, putting up the cost of people’s pension policies, and actually driving all that activity offshore”, and that “it as a good way of taking a lot of tax out of the UK and spending it in Europe”?
My research tells me that the commission expects there will be up to a 90 per cent reduction in derivatives transactions, a positive impact of at least 0.1 per cent if the generated tax revenues are spent on growth-enhancing public investments, reducing other taxes or investing in public services and infrastructure.
It shows that the increase in capital costs could be mitigated by excluding primary markets for bonds and shares from the tax, and that the real economy could be protected by ensuring the tax is levied only on secondary financial products, thus not affecting transactions such as salary payments, corporate and household loans.
The European Commission has also dismissed the belief that financial institutions could avoid the tax by moving their transactions offshore, saying they could only do so by giving up all their European customers.
The FTT is about social justice and fair play as well as economic interest. What’s the problem with that, Mr Cameron?
There is a connection between Ben Thomson of Reform Scotland’s support for further devolution of taxation to local authorities (Perspective, 22 May) and Terry Murden’s for a VAT and Employers’ national insurance contributions (NIC) reduction (Business comment, 23 May).
The full VAT rate could probably be just 10 per cent (with the lower rate abolished) but only if it was applied to almost all our expenditure, rather than excluding so many of the major items (insurance, most food, utilities, TV and car licences, books, newspapers, prescriptions, dental fees, most foreign holidays, domestic travel and children’s clothes).
This would result in less wastage of food, utilities and clothes, would be more neutral rather than favouring some expenditure preferences cf others, would avoid all the anomalous nonsenses like the “pasty” tax, and could release many public and private sector staff into more productive employment, including expanding HMRC’s tax-evasion departments. If Reform Scotland was really radical, it would support “no taxation without representation” and advocate the total abolition of business rates, corporation tax and the anti-employment Employers’ NICs.
The resulting savings would be applied, by law in line with an easily computed national scale, to increased wages and pensions. We voters would then have to accept full democratic responsibility for the taxes required to pay for the services that we demand through our votes.
An alternative would be Ron Greer’s land rental value tax, but his frequent advocacy in your columns has regrettably generated no support or detailed examination by other experts.
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