Market leading insight for tax experts
View online issue

Financial tax proposals are ‘deeply confused’, says PM

printer Mail

There was little in the Cannes summit declaration to cheer proponents of a global tax on financial transactions. 

The G20 said it agreed that, over time, new sources of funding need to be found to address development needs.

‘We discussed a set of options for innovative financing highlighted by Mr Bill Gates, such as advance market commitments, diaspora bonds, taxation regime (sic) for bunker fuels, tobacco taxes, and a range of different financial taxes,’ it reported.

‘Some of us have implemented or are prepared to explore some of these options. We acknowledge the initiatives in some of our countries to tax the financial sector for various purposes, including a financial transaction tax, inter alia to support development.’

Gates had told the G20 that financial transaction taxes (FTT) ‘already exist in many countries, where they generate significant revenue, so they are clearly technically feasible’.

He added: ‘The G20 countries will continue discussing the FTT. For those that choose to adopt it, I urge you not to use all of the proceeds as general revenue. It is critical that a portion of the money raised be reserved for investments in development.’

David Cameron told MPs this week that he had been ‘clear all along’ that the UK government was not opposed in principle to a financial transaction tax if one could be agreed on a global level.

‘But we will not unilaterally introduce a new financial transactions tax in the UK and neither will we support its introduction in the European Union unless it is part of a global move,’ the Prime Minister said. Britain had introduced a bank levy and was meeting its global agreements on overseas aid.

‘If other countries want introduce new financial taxes at home, including to raise revenue for development, that is for them to decide. But what they should not do is try to hide behind proposals for an EU tax as an excuse for political inaction on meeting targets for spending on development or indeed climate change,’ he said.

‘The current proposals for a financial transactions tax in Europe are so deeply confused that different European countries and institutions have talked about spending the revenues of such a tax in five different ways – on development, on climate change, on social policy, on resolving the banking crisis, and, most recently, to supplement the EU budget.’