Following the September G20 summit, in which Gordon Brown's suggestion to introduce a financial transaction tax (FTT) met with a sceptical response from global finance ministers, the UK government is still pushing for a global tax on financial transactions.
This issue has already been discussed by the European Parliament ECON committee. Any such levy would be vigorously opposed by the financial industry, according to Xavier Rolet, Chief Executive of the London Stock Exchange Group, as it would increase costs and have a 'substantial damping effect' on transaction activity. By contrast, Sony Kapoor, Managing Director of think-tank Re-Define, claimed the 'revenue potential is enormous'.
The European Commission, however, is not planning any measures at present and for the time being is just following the international debate, as 'we don't know to what extent it will affect speculation, stability', said Alexander Wiedow.
The Financial Times is reporting that, in a discussion paper that sought to provide the intellectual underpinnings for such a levy (often termed a Tobin tax), the Treasury has admitted that 'the commitment of all the major international financial centres to implement the charge' is still required in order for it to work.
But it believes 'such co-ordination may now be more likely' and considers the argument is persuading more people.
The idea of the Tobin tax would be to place a small tax on all financial transactions, to provide a pool of resources to help cover the social and economic costs of financial turmoil.
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