OPPOSITION politicians and City figures slammed Gordon Brown’s talk of a ‘Tobin tax’ yesterday, dismissing it as a “theoretical proposal” that would be impossible to put into effect without disastrous consequences for London.<br /><br />The Tories are understood to oppose Brown’s plan and are believed instead to favour levying a small fee on banks’ balance sheet, which would be tantamount to compulsory bailout insurance. <br /><br />The Prime Minister revived discussion of a small tax on financial transactions at the G20 meeting of finance ministers in St Andrews, Fife, on Saturday as one of a range of tools to rein in the banks. But the idea was promptly scotched by other delegates. Canada’s finance minister Jim Flaherty and US Treasury Secretary <br />Timothy Geithner both ruled out the suggestion immediately. Russia and the European Central Bank also oppose it. <br /><br />Last night senior figures in the Square Mile were equally unimpressed. Angela Knight, chief executive of the British Bankers’ Association, said: “It assumes two things – firstly, that everyone in the whole world applies it in the same way, and secondly that there’s no financial innovation. In the first case business will simply flow to the countries that don’t apply the tax, and in the second case people will just develop new instruments to get around it.”<br /><br />John Whiting, president of the Chartered Institute of Taxation, said it was “a nice theoretical proposal, but it just isn’t practical. It’s worth raising the topic, kicking it around for a bit and then deciding ‘we were right to forget about it 10 years ago’.”<br /><br />Vince Cable, the Liberal Democrat Treasury spokesman, said Brown should focus his energies on getting taxpayers value for underwriting banks such as RBS rather than toying with an unrealistic idea.<br /><br />The Tobin tax was last floated by Lord Turner of the FSA in an interview in August. At the time it met with an irritated response from economists, who warned it would reduce market liquidity without improving the stability of the financial system.<br /><br />Yesterday, the International Monetary Fund’s director Dominique Strauss-Kahn said that a Tobin tax would be unworkable. He added that the IMF was working to “solicit an insurance premium from a business activity that is riskier than others”. The IMF is set to present concrete proposals for the tax to G20 finance ministers next April, for review before submission to G20 leaders in June.