21 Dec 2011

Vince Cable on FTTs :-(

In a commentary published in this morning's Guardian called "Put aside the City's whingeing", Vince Cable makes a serious attack on FTTs. Here's what he says:
Much phoney emotion has been generated by the proposed EU transaction tax. On the EU side, a technically challenging proposal has been wrapped in almost spiritual clothing (indeed, the Vatican has endorsed it). But it is in reality a cynical raid on UK financial services – or, more likely, the consumers of them – to fund the EU budget. A perverse Robin Hood tax levied on the people of Nottingham to pay King John. This tax has however never been a serious threat to the City since taxes are governed by unanimity.
 I honestly cannot believe that Cable has been taken in so easily. I posted the following comment.

Vince Cable - you disappoint me. Why on earth do you buy the City propaganda that an FTT has to be "a cynical raid on UK financial services - or, more likely, the consumers of them - to fund the EU budget."
It would be if it was only imposed by Europe, or if the UK government failed to negotiate a cap.
But, if instead, the UK government imposed its own FTT, it could literally solve all the UK's problems with the stroke of a pen. And at the same time it would provide a fair and level playing field where everyone contributed - not just those being crippled by 20% VAT and excessive income tax.
Visible financial transactions in the UK (those reported in the B.I.S. data set) are running at around 1000 trillion a year. To this we should add around 300 trillion of foreign exchange transactions and 200 trillion of OTC interest rate derivative trading (Bank of England figures for April 2010). And these figures certainly fail to cover the vast amounts of shadow banking and industrial scale tax evasion for which the City is world famous (and which rob European tax payers of 600 million a year).
An FTT applied to just the visible part of this would raise collossal amounts of revenue. A tax of around 0.006% could allow VAT to be scrapped (it only raised about 67 billion in 2009-2010). Add another 0.003% and you could abolish Corporation tax (which only raised about 34 billion, thanks to the inefficiency of HMRC). I won't even bother to produce the number needed to provide free university education and provide work or training for the million plus youth unemployed. I'm sure you can do the sums.
Wake up!! Don't believe the lie that an FTT has to be an EU imposed evil. Get your colleagues in the government to consider one for the UK, or else pull the plug on them.
With a bit of luck, he might just read the comments on his own article.

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