The announcement by the European Commission that a Financial Transaction Tax (FTT) should not be introduced unilaterally at EU level has been strongly welcomed today by Kay Swinburne MEP, European Conservatives and Reformists group economic and monetary affairs spokesman in the European Parliament.
The commission has published a 'Communication' in which it says that, "the FTT is an instrument that is best suited to raising revenues at the global level..... FTT appears less suitable for unilateral introduction at EU-level since the risks of relocation are high and would undermine the ability to generate revenue." It sets out to conduct more detailed technical work and comprehensive impact assessment, with a view to making 'appropriate proposals' next summer.
Dr Swinburne said:
"71 percent of a European FTT would be paid in the UK - over four times more than Germany and over ten times more than France. This would be a disproportionate and perverse tax on the City of London which would do little to modify behaviour.
"Socialists are constantly calling for the EU to 'regulate global finance' as if the four corners of the financial world end at Europe's border. It is time that they dropped this ludicrous campaign that could destroy the goose that lays the golden egg for businesses of all sizes across the EU. Financial markets are global and highly mobile.
"The EU needs to drop this fixation with granting itself tax-raising powers of any kind. The EU must remain subservient to the national governments, and the best way of ensuring this accountability is through the budget process. If the EU has the power to raise its own taxes it becomes the master of the national governments, not their servant.
"The European Commission is more favourable towards the concept of banking levies similar to those being discussed in the UK. However, this should ultimately be a matter for national governments to decide based on their own market conditions."