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Osborne: FTT ‘suicidal’ for UK & EU

Tuesday 15 November 2011 – by Andrew Hickley

UK chancellor George Osborne has savagely attacked proposals for an EU-wide financial transaction tax as a “bullet aimed at the heart of London”, saying that it would be economic suicide both for Britain and the EU.

In his most outspoken criticism of the levy, Osborne claims that a Europe-wide FTT would burden the union in its attempts to escape its escalating sovereign debt crisis, writing in London’s Evening Standard on Monday.

In September, the European Commission set out its proposals for the levy, which would see derivatives transactions in the EU being hit by a 0.01 per cent charge. Bonds, shares and all other securities will see a higher 0.1 per cent tax.

Putting forward the proposal, the commission calculated that the tax would raise around €57bn ($77.4bn) across the EU annually. However, Osborne jumped on the commission’s own estimations, saying that if enacted, the proposals would cost “hundreds of thousands of jobs”, given the costs to the real economy.

“This government is all for making the financial sector pay more in tax,” Osborne claimed.

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“But the idea of a tax on mobile financial transactions that did not include America or China would be economic suicide for Britain and for Europe.”

Osborne’s attack will come as a blow to the commission, with UK opposition seen as a major stumbling block in enacting the so-called Tobin tax.

Ireland, the Netherlands and Sweden have been among the countries that have voiced scepticism about the ability to enact the controversial levy if the UK refuses to endorse the tax.

While Britain has supported the global introduction of an FTT, an EU-only tax has been calculated to hit the country disproportionately above its European counterparts.

A report from the libertarian Adam Smith Institute, unveiled earlier in November, said that the tax would cost Britain £25.5bn (€29.6bn/$40.7bn) and “cripple” the economy over the long term.

Osborne’s article continued: “We need to strengthen the single market, particularly in services where many thousands of jobs in Britain could be created by expanding the opportunities in our largest export market.

“Europe certainly shouldn’t be creating new burdens. Proposals for a Europe-only financial transactions tax are a bullet aimed at the heart of London.”

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