Uncertainty Looms for UK as Europe Moves On Tobin Tax
First published in Accountancy Age, 23 January 2013
Uncertainty and anti-competitiveness could loom in Europe after 11 nations agreed to move forward with looking at a financial transaction tax (FTT).
Also known as a 'Tobin Tax', the levy would fall on financial transactions in a bid to make the financial services industry pay its way. The EC's Ecofin Council adopted a decision by 11 member states to go ahead with 'enhanced cooperation' on an FTT.
But, with the UK against the plans, business representatives have warned against its further progress, claiming that adoption by just some countries would create confusion among the financial services industry, and destroy its competitiveness against other nations and regions.
Taxand chairman Frederic Donnedieu de Vabres said the plan has from a lack of clarity about how the FTT would be formed and would create a "trading dichotomy across Europe", which could benefit the UK.
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"As things stand, financial hubs such as Frankfurt, Paris and Madrid will be affected by the tax, with other centres of trading, including London, seemingly gaining a significant advantage through their resilience in not signing up to the agreement.
What is clear is that implementation, in whatever form it finally takes, could have serious consequences for the overall competitiveness of Europe as a global hub for financial services. The lack of consistency in the taxation of trading could lead multinationals to avoid the continent altogether, instead looking to the US or Asia."