Tobin tax could hit the City even if UK does not introduce one

BRUSSELS is stepping up its efforts to find ways of hitting the City with a Tobin tax even if UK does not consent to impose one itself.

If adopted, the measures could amount to a tax grab on the City worth hundreds of billions of pounds.

A committee of European Parliament members says it has found a way to create a “wider and stronger net” for a tax on financial transactions even for countries that do not impose their own tax.

The Economic and Monetary Affairs Committee says that it has found ways to tackle “tax evasion” by sovereign states that do not introduce the tax.

It would work by throwing into question a security’s “legal ownership rights” if a buyer doesn’t pay the levy. “If the buyer of a security did not pay the FTT [financial transaction tax], he or she would not be legally certain of owning that security and would hence be unable to clear the trade centrally,” the committee says.

MEPs have also said they could beef up the tax by requiring it to be paid on any security issued within the states that agree to the tax. “For example, Siemens shares, issued in Germany and traded between a Hong Kong institution and one in the US would have to pay the tax,” they say.

That is a significant addition to the current proposal drawn up by the European Commission, whereby any trade executed by an institution with an established presence in the Tobin tax zone would be hit.