First, there was a report by the Bureau of Investigative Journlism (based at City University in London) entitled City banks "cheat" Europe in a £600m tax avoidance trading scheme. Specifically, the two-month study by the Bureau has uncovered a discreet $102bn market in European shares whose ‘central’ purpose is tax avoidance. The Bureau’s analysis suggests the European tax loss – mainly to France, Germany and Italy – is up to €595m a year. It uses a wheeze called "dividend arbitrage. Here's how they describe it.
"A bank or hedge fund lends equities in often high yielding French, German or Italian companies to another institution. The receiving institution then passes the equities through a network of low or no tax jurisdictions before returning the equities to the original owner using a subsidiary in another tax haven. In this way, banks can avoid the 15% average withholding tax levied on dividends in European countries.It seems to me that these are exactly the sorts of "British interests" that Cameron is so keen to protect. Not surprising that Sarkozy and Merkel find this objectionable.
For hedge funds based in the Cayman Islands or Bermuda, the trade is particularly useful in slashing tax bills."
Second, BBC News has a thing about a report by a parliamentary committee that claims that there is a far too cozy arrangement between big business and HM Customs and Revenue. Specifically, there is apparently something like £25 billion of unpaid tax. And they criticise the way in which deals are made between the HMRC and corporations like Goldman Sachs.
This all sounds like a very good reason for using an FTT mechanism, which has the great advantage of being extremely difficult to avoid.