How would the financial transaction tax affect London/UK?

drc

Looks like the European Union are going to press ahead with the financial transaction tax (specifically targeting London where a lot of the tax would come from). If this goes ahead, how would it affect London as a) financial centre b) the economy in general c) property prices in London?

gagahouse

drc wrote: »

Looks like the European Union are going to press ahead with the financial transaction tax (specifically targeting London where a lot of the tax would come from). If this goes ahead, how would it affect London as a) financial centre b) the economy in general c) property prices in London?

Let's see it happen first, UK has most to lose and the proposal requires unanimity - I'm expecting the City to make sure the UK uses its veto. In fact, there is every incentive to veto as the EU will then only be able to implement this in the rest of the EU, driving more business London's way.

A 'Tobin Tax' doesn't make sense unless it is global, I see no appetite in the US or Asia to follow.

There is one final insidious aspect of this tax proposal, this will be one of the the first 'own funds' direct levy from the EC. The EC now has revenue raising powers and will get 50% of the proceeds of the tax, the rest being distributed to member countries. The UK would be a big loser whilst agreeing to cede some tax raising sovereignty to the EU.

IronWolf

Surely there are no British politicians stupid enough to let this one get through

ILW

IronWolf wrote: »

Surely there are no British politicians stupid enough to let this one get through

Nick Clegg will agree with anything "European"

drc

gagahouse wrote: »

There is one final insidious aspect of this tax proposal, this will be one of the the first 'own funds' direct levy from the EC. The EC now has revenue raising powers and will get 50% of the proceeds of the tax, the rest being distributed to member countries. The UK would be a big loser whilst agreeing to cede some tax raising sovereignty to the EU.

Well, if that's the case I am sure some short sighted MPs will vote in favour of it (probably Lib Dems). After all, our wonderful ex-Prime Minister (Blair) managed to get rid of our rebate (god knows why), so what's a few billion more of UK taxpayers money thrown in the direction of Europe.

gagahouse

drc wrote: »

Well, if that's the case I am sure some short sighted MPs will vote in favour of it (probably Lib Dems). After all, our wonderful ex-Prime Minister (Blair) managed to get rid of our rebate (god knows why), so what's a few billion more of UK taxpayers money thrown in the direction of Europe.

Better resources for the EU budget
The new multi-annual EU budget will have more transparent, fairer resources and will reduce and simplify Member States' contributions. The Commission proposes new own resources to the existing ones, as foreseen by the Treaty. The aim is not to increase the EU budget, but to put it on a sounder footing and lower Member States' direct contributions.

The new own resources would be a financial transaction tax and a new modernized VAT. Simultaneously, the current VAT-based resource (a portion of the national VAT collected by Member States) would be abandoned.

The Commission also proposes to simplify the existing correction mechanisms that apply to a number of Member States. This will be done through a lump sum gross reduction on their GNI payments.

http://europa.eu/rap...&guiLanguage=en

To answer your original questions, if the UK did ever implement this it would be negative for all three.

Mr_Mumble

Sweden is the best real-world example of such a transaction tax being imposed, it was a disaster.

Afaik the current proposal would be any tax collected on transactions will go straight to the EU which would probably mean less money for Westminster to spend (e.g. stamp duty would go straight to Brussels).

Gagahouse, I can't get your link to work (the url seems to have been shortened with ... in the middle ruining the link).

Re the proposals quoted by gagahouse: the Eurocrats* don't seem to have understood the "no taxation without representation" thing! The EU 'parliament' is the tertiary power below the unelected EU commission and private European Council. It is outrageous that 1% of VAT goes directly to this fiscal black hole but for this undemocratic entity to get more money to spend with no oversight in Britain would hopefully lead to the public finally rising up against the political class.

*I was going to call 'em euro-fascists here, fascism is such an overused word (a point made by George Orwell in 1944!) but its very close to being what they genuinely are.

FTBFun

I suspect it'll end up as a Eurozone only tax. Bye bye Frankfurt.

ChiefGrasscutter

I recall the the Scandanavians also experimented with a currency union in the early 1800's. I think it also ended badly............

gagahouse

Mr_Mumble wrote: »

Sweden is the best real-world example of such a transaction tax being imposed, it was a disaster.

Afaik the current proposal would be any tax collected on transactions will go straight to the EU which would probably mean less money for Westminster to spend (e.g. stamp duty would go straight to Brussels).

Gagahouse, I can't get your link to work (the url seems to have been shortened with ... in the middle ruining the link).

Re the proposals quoted by gagahouse: the Eurocrats* don't seem to have understood the "no taxation without representation" thing! The EU 'parliament' is the tertiary power below the unelected EU commission and private European Council. It is outrageous that 1% of VAT goes directly to this fiscal black hole but for this undemocratic entity to get more money to spend with no oversight in Britain would hopefully lead to the public finally rising up against the political class.

*I was going to call 'em euro-fascists here, fascism is such an overused word (a point made by George Orwell in 1944!) but its very close to being what they genuinely are.

Try this one, was in a rush when I posted that!

http://ec.europa.eu/taxation_customs/taxation/other_taxes/financial_sector/index_en.htm

gagahouse

ChiefGrasscutter wrote: »

I recall the the Scandanavians also experimented with a currency union in the early 1800's. I think it also ended badly............

They also experimented with a financial transaction tax which drove their business to London ending in them scrapping it.

Edit : oops, Mr Mumble already posted about that, I'm still in a rush!