Failure to join bank tax plan leaves UK in ‘untenable’ position

Published on 23/06/2012 02:08

Supporters of a Europe-wide tax on banks have condemned the UK’s failure to take part as “untenable”.

The attack came after nine EU countries decided to go ahead with a tax on financial transactions between banks as a way of raising extra money to fund future bail-outs.

The call for an EU financial transactions tax (FTT) was suggested by Brussels as the eurozone crisis deepened, partly to show that banks were sharing the bail-out burden alongside taxpayers. But Britain has been leading opposition, insisting such a tax would have to apply globally to function fairly.

At talks between EU finance ministers in Luxembourg, an inner core of nine governments, including Germany, France, Italy, Greece and Poland, decided to press ahead alone.

Chancellor George Osborne refused to budge, insisting the tax would hurt the European economy, as financial transactions were routed to countries outside the EU. He said: “I would have thought we want to be attracting business rather than the other way around.”

German finance minister Wolfgang Schaeuble said he would prefer that all 27 EU member countries adopted the tax together, but he hoped it would be possible to go ahead with fewer. “We emphatically want to move ahead,” he insisted.

Nicolas Mombrial, Oxfam’s EU spokesman, said: “We’re delighted that a coalition of willing countries has finally asked the UK and other blockers to step out of the way. Europe can finally move beyond talking, and has a real opportunity to introduce an FTT that will help to fight poverty and climate change.”

He said next week’s EU summit in Brussels should be a time for more countries to join the FTT “and show they’re ready to put the interests of ordinary people before those of the financial sector”. He added: “To gain popular support, a significant part of the [FTT] revenues should go to people who have been hit hardest by the economic crisis in poor countries.

“Using the proceeds of a new tax only for EU projects or to pay down deficits would be a betrayal of the millions who support a Robin Hood tax.”

The Robin Hood tax campaign also welcomed the move. Its spokesman, David Hillman, said: “We are delighted that a coalition of European countries has agreed to press ahead with a financial transaction tax.

“But the UK public will be rightly angry that George Osborne is resisting efforts to make the City pay its fair share. A fully functioning European FTT – combined with its continuing popularity with the public – will make this government’s opposition increasingly untenable.”

More than 50 financiers have written to Prime Minister David Cameron and other European and world leaders calling on them to introduce financial transaction taxes.

The letter, signed by senior figures from Wall Street, the City of London and other financial institutions across Europe, says that FTTs “will rebalance financial markets away from a short-term trading mentality that has contributed to instability in our financial markets. They also have the potential to raise significant revenue.”