European plans for a financial transactions tax risk distorting markets and may also jeopardize economic growth, the British Bankers’ Association said.
Lenders would pass on the cost of the tax to customers in the same way they already transfer the cost of U.K. Stamp Duty on share purchases to clients, Brian Mairs, a spokesman for the London-based lobby group, said by telephone today.
“Such a tax would only be viable if implemented on a global scale because otherwise it would simply result in distortions in the global financial markets,” Mairs said. “In a time we’re seeking to promote growth, not just in the U.K. but across the EU, what are the likely consequences of imposing a tax on financial transactions?”
The British government, which oversees Europe’s biggest financial center, is preparing to clash with its French and German counterparts over the levy, which would be applied to all 27 EU member states. French officials have proposed such a levy on several occasions in recent years only to run into international opposition each time. The tax would need to be applied globally, or transactions would relocate to countries that don’t apply the tax, the Treasury said in statement today.
The Commission will publish its draft law and an assessment of its potential economic impact before the G-20 meeting on Nov. 3-4 in France. The proposed levy is sometimes called a Tobin tax after James Tobin, the Nobel Prize-winning economist who first suggested the idea in 1971.
“Europe now has an historic opportunity to make the financial sector work in our interests and help millions of people here and in poor countries who have been hurt by a crisis they did nothing to cause,” said Max Lawson, spokesman for the Robin Hood Tax group, a pressure group which campaigns for a Tobin Tax to alleviate global poverty.
To contact the editor responsible for this story: Edward Evans at email@example.com