7 Apr 2013

The real reason why the City is opposed to Financial Transaction Taxes

Since 11 european countries decided to introduce financial transaction taxes, I've seen large numbers of attempts by bloggers and media people to demonstrate that FTTs are a bad idea. We are told that the man in the street would end up paying the bill. Pensions would all but disappear. And it will be a disaster for anyone doing business.

Frankly, the idea that a tax of 0.1% on each transaction could seriously affect real business is laughable. But of course, they have to try it.

The reason for trying that argument stems from the fact that the real reason for blocking the introduction of financial transactions is that it would mean that the 1% who own the vast majority of the worlds resources would have to start being up front about what they do with their money.

This week the International Consortium of Investigative Journalists revealed that they have received  around 2.5 million documents concerning the use of tax havens. And some of the juicy bits of information contained in those documents has started to filter out via newspapers including the Guardian and Le Monde. Both papers have run a whole series of pieces in the last few days. For example, the Guardian revealed that "More than 175,000 UK companies have offshore directors" and pointed a finger at the country whose links with the offshore tax havens is perhaps the most obvious - namely, the UK.

I can also thoroughly recommend the ICIJ's own website which has a whole section on the The Global Offshore Money Maze. It includes a very entertaining interactive feature that explains how you can use Offshore Tax Havens to "Stash your Cash" - I just saw a piece about the feature on the M6 channel's TV news bulletin here in France. There's also a nice three minute video giving a quick course in Tax Havens called "Tax Havens 101".

One of the things I learned from the video is that "half of all global trade passes through offshore tax havens, and roughly 1/3 of the world's wealth resides there". And the reason for that is not only that this allows you to avoid paying taxes, but it also means that it is almost impossible to know what you have been doing.

That's the real reason for the war on FTTs that has been declared in the last few months. The people who object to FTTs are almost certainly associated with activities that they would prefer to keep secret.

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