European pensioners, investors, consumers, employers and workers win as EU financial transaction tax idea drifts away.
Robert Rhone - USA
Utter rubbish. The UK governments decision to oppose the FTT was based on good economic sense - hence the conclusions of the multi-party HoL report that the commissions proposals are deeply flawed and will damage the UK economy. The current problems being experienced by EU states are due to high levels of public spending and personal indebtedness, neither of which will be solved by an FTT. There was never going to be unanimity and to blame this on 'privileged access to political power' is wrong.
James - UK
The language in this article is somewhat hysterical. The FTT was a flawed, unviable proposal driven by under-informed, ill-directed revenge motives. Vella and Schmidt-Eisenlohr's November 2011 FTT report to the British tax review pointed to "the danger that the FTT will be sold to the public as a tax that punishes those responsible for the crisis, while the true incidence falls on the consumers of financial services".
"Furthermore as the FTT targets a broad spectrum of financial institutions, it will be also be levied on individuals and institutions who bore none of the blame." Economically sensible, high-level decision makers never entertained this idea. It was never going to be a tax on banks, as would be the IMF-recommended financial activities tax, or Obama's bank responsibility fee. In fact, G-20 Australian Treasurer Swan accurately described the FTT idea as "nuts".
Jan - Sydney, Australia
@Jan. Fortunately for consumers, Financial Transaction Taxes or FTTs are targeted at casino banking and can easily be designed in a way that protects the investments of ordinary people and businesses. The FTT's tax rate is set extremely low (an average rate of just 0.05 per cent) precisely to avoid having an impact on institutions or individuals that carry out very few transactions, such as pensions and savings. Like other taxes, specific exemptions and punitive measures can be built in to protect e.g. lending to businesses or exchanging holiday money. Hedge funds and investment banks are comprised primarily of high net worth individuals, and it is these institutions which will be primarily affected by a Financial Transaction Tax.
The IMF has studied who will end up paying transaction taxes, and has concluded that they would in all likelihood be 'highly progressive'. This means they would fall on the richest institutions and individuals in society. This is in complete contrast to VAT, which falls disproportionately on the poorest people. It's also important to recognise that several G20 countries - including South Korea, India, South Africa, USA and Brazil - already apply some form of effective FTT. The UK's own 0.5 per cent tax on share transactions, stamp duty, is one of the best examples of a successful FTT raising the exchequer more than £3billion each year without a significant loss of business from London.
We need to look at the bigger picture. This small tax could help rebalance the UK's economy. By ensuring the banks pay their fair share in the crisis, we can encourage longer term stability in the financial sector while raising tens of billions of pounds to help those living in poverty in the UK and abroad.
RobinHoodTax - Sherwood