Video mocks UK’s decision to reject Financial Transaction Tax

19 Feb

A video, starring Bill Nighy, Andrew Lincoln and other well-known actors, has been released this week in favour of the Financial Transaction Tax (FTT), and attacks Chancellor George Osborne for not signing up to the so-called ‘Robin Hood’ tax.

Set 10 years in the future, the mock television debate highlights the supposedly positive effects of the FTT from representatives of EU member states that signed up for it, compared to the opposing British viewpoint, as the UK opted out.

To my mind, this high profile campaign is seriously misguided.

Imposing a 0.1% tax on all financial transactions, and 0.01% on derivatives, will make it more costly for companies to raise capital, reduce market liquidity, slash the value of pensions, and hit savers hard.

Also known as the ‘Tobin Tax’ (after economist James Tobin, suggested the measure in the 1970s), the FTT will, I believe, not only lead to a drop in investment activity – threatening  jobs – but it would also trigger a fall in GDP.

Figures show an estimated € 204.9 billion in asset value loss in Italy is predicted, amounting to 14.1 per cent of the taxable value, followed by € 150.6 billion in Germany.  Even though the UK is not ‘signing up’ to the tax, Britain will undoubtedly feel the knock-on effects.  The FTT will affect assets issued in the EU member countries, which will inevitably impinge on numerous UK-based investors and savers.

Towards the end of last year, EU lawyers issued a document claiming the FTT was in fact illegal, as it would “exceed the member states’ powers” and would be “incompatible with the EU treaty.”  However, this has still not deterred the 11 current EU members who are going ahead with the FTT, namely Germany, France, Italy, Spain, Belgium, Austria, Portugal, Greece, Slovenia, Slovakia and Estonia.

Like many observers, I’m confident that this economically damaging tax is certainly not the antidote to the financial woes of European countries – many of which remain over-taxed and debt-laden – in fact it’s quite the opposite.

Perhaps other well-meaning actors will create a video and present how dangerous the FTT could be?

Nigel Green deVere Group

Written 19th Feb

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