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Press watch: Financial transactions tax

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‘It has been a long time coming. Four decades have passed since James Tobin, a Nobel-prizewinning US economist, first proposed "throwing sand in the wheels" of the financial markets by imposing a tax on transactions. Now the idea is within months of becoming a reality.

‘The European Commission has given the green light for a eurozone "coalition of the willing" to go ahead with a financial transaction tax (FTT), likely to be levied at 0.1% on shares and bonds, and at 0.01% on derivatives.

‘For its supporters, a transaction tax is a classic no-brainer: it will punish those who plunged the world economy into its deepest slump since the 1990s and raise lots of cash from banks, cash that would otherwise have to be extracted from blameless members of the public. Many countries already have taxes on financial transactions (stamp duty, in Britain's case), so this is hardly a revolutionary proposal.

‘Opponents say that it will add to the problems of the financial sector when it is already on its knees, raising the costs of funding and so leading to even weaker flows of credit to households and businesses; the fact that the FTT is not being universally levied, even within the eurozone, means it will be simple to avoid the tax; Frankfurt's loss will be the City of London's gain, because the UK's position is that an FTT has to be imposed everywhere if it is to work.’

Larry Elliott, economics editor, The Guardian

24 October 2012