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| The time is right for a financial transaction tax | The time is right for a financial transaction tax |
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| The time has come for George Osborne to get serious about a financial transaction tax (FTT). The chancellor's begrudging acceptance of the principle after the 2009 G20 in Pittsburg has since withered away into general antipathy. | The time has come for George Osborne to get serious about a financial transaction tax (FTT). The chancellor's begrudging acceptance of the principle after the 2009 G20 in Pittsburg has since withered away into general antipathy. |
| Yet this flies in the face of a growing international mood that could even see some of the main global financial centres involved, including the City of London and Wall Street. At a time when deficits are rising because of low growth, leading economies including Britain and the United States need alternative revenue measures from continuing financial market speculation to relieve pressures on lower and middle income households and the public services they use. | Yet this flies in the face of a growing international mood that could even see some of the main global financial centres involved, including the City of London and Wall Street. At a time when deficits are rising because of low growth, leading economies including Britain and the United States need alternative revenue measures from continuing financial market speculation to relieve pressures on lower and middle income households and the public services they use. |
| From the discussions I had at a conference on the FTT in Washington DC in the last week and from the conversations I have had in Congress, I believe there is growing interest in the idea and a real diplomatic opportunity for Britain to strike an agreement with US policy-makers and secure a plan for the phased introduction of a financial transaction tax process simultaneously in Wall Street and London. | From the discussions I had at a conference on the FTT in Washington DC in the last week and from the conversations I have had in Congress, I believe there is growing interest in the idea and a real diplomatic opportunity for Britain to strike an agreement with US policy-makers and secure a plan for the phased introduction of a financial transaction tax process simultaneously in Wall Street and London. |
| With 11 EU countries including France and Germany now opting for an FTT, the chancellor can either sit on the sidelines, or instead talk to the Americans and the new US treasury secretary Jack Lew about a joint approach that avoids the risk of traders playing one jurisdiction off against the other. | With 11 EU countries including France and Germany now opting for an FTT, the chancellor can either sit on the sidelines, or instead talk to the Americans and the new US treasury secretary Jack Lew about a joint approach that avoids the risk of traders playing one jurisdiction off against the other. |
| There are many lessons from the banking crisis, the most obvious of which is that the sheer globalised might of financial trading can overpower the plans and defences of individual nation states. Governments shouldn't just shrug and accept this fate – which is why George Osborne should champion a reform agenda to harness international financial markets so that they serve our societies and economies. | There are many lessons from the banking crisis, the most obvious of which is that the sheer globalised might of financial trading can overpower the plans and defences of individual nation states. Governments shouldn't just shrug and accept this fate – which is why George Osborne should champion a reform agenda to harness international financial markets so that they serve our societies and economies. |
| If ever there was a time to seek international consensus on a financial transaction tax it is now, as countries continue to deal with the aftermath of the global financial crisis and the large deficits it created. Deducting a tiny fraction of one percent of the value of trades in equities, bonds and derivatives could raise billions if introduced in a concerted way across the principal world financial centres. | If ever there was a time to seek international consensus on a financial transaction tax it is now, as countries continue to deal with the aftermath of the global financial crisis and the large deficits it created. Deducting a tiny fraction of one percent of the value of trades in equities, bonds and derivatives could raise billions if introduced in a concerted way across the principal world financial centres. |
| The decision to press ahead with a new set of financial transaction taxes in 11 EU countries this year will provide hard evidence of the impact of these levies and the revenues they can generate. It is, though, a brave decision for the EU to go it alone, and given the size and importance of the City of London in the UK economy, we should work harder to ensure others move in tandem. Even with the participation of Germany, France and Italy, there are risks that some traders may simply shift to alternative jurisdictions. | The decision to press ahead with a new set of financial transaction taxes in 11 EU countries this year will provide hard evidence of the impact of these levies and the revenues they can generate. It is, though, a brave decision for the EU to go it alone, and given the size and importance of the City of London in the UK economy, we should work harder to ensure others move in tandem. Even with the participation of Germany, France and Italy, there are risks that some traders may simply shift to alternative jurisdictions. |
| For these reasons we support a financial transaction tax with the widest possible global participation. London and New York City are the two largest global financial centres – and if they are to enforce a financial transaction tax, ideally both will need to move in concert. | For these reasons we support a financial transaction tax with the widest possible global participation. London and New York City are the two largest global financial centres – and if they are to enforce a financial transaction tax, ideally both will need to move in concert. |
| Labour should not wait until after 2015 to move this agenda forward, which is why building alliances especially in the US is an important task. A financial transaction tax needs careful design, must be set at a modest rate without creating negative economic consequences and must minimise international tax arbitrage. | Labour should not wait until after 2015 to move this agenda forward, which is why building alliances especially in the US is an important task. A financial transaction tax needs careful design, must be set at a modest rate without creating negative economic consequences and must minimise international tax arbitrage. |
| Of course, in the UK we already have a longstanding stamp duty on incorporated company share transactions of 0.5%, raising billions for the exchequer – so the concept is not as foreign as the chancellor might make out. In the US the existing Securities & Exchange Commission (section 31) fee on transactions means that the principle has already been broached. | Of course, in the UK we already have a longstanding stamp duty on incorporated company share transactions of 0.5%, raising billions for the exchequer – so the concept is not as foreign as the chancellor might make out. In the US the existing Securities & Exchange Commission (section 31) fee on transactions means that the principle has already been broached. |
| If Britain and America can move forward together so that Wall Street and London trades are simultaneously brought into a financial transaction tax regime, real progress could be achieved in safeguarding vital services and economic growth. It is time for our chancellor to wake up and seize the moment. | If Britain and America can move forward together so that Wall Street and London trades are simultaneously brought into a financial transaction tax regime, real progress could be achieved in safeguarding vital services and economic growth. It is time for our chancellor to wake up and seize the moment. |