THE GOVERNMENT was branded “dishonest” yesterday, after it said it had “no objection” to a global Tobin tax that would wipe billions off City profits – even though it continues to oppose a European version of the levy.
A spokesperson for the Treasury said the government had “no objection in principle” to a financial transaction tax but that it “would have to apply globally” because a European one would put London at a competitive disadvantage.
Bill Cash, the Conservative MP for Stone, told City A.M.: “The government is being thoroughly dishonest for political reasons. There is no justification for a Tobin tax in any form, which would badly affect growth whether it was global or not.”
Privately, Treasury officials admit the only reason the government backs a worldwide Tobin tax is because such a levy would never secure support from financial centres such as Hong Kong, allowing the coalition to adopt a politically popular position without having to deal with the consequences.
José Manuel Barroso, the European Commission president, yesterday proposed a financial transactions tax that would raise up to €55bn (£48bn) a year to help bail out troubled countries.
Barroso is pressing ahead with the tax even though the commission’s own cost-benefit analysis shows it would reduce Europe’s GDP by as much as 1.76 per cent or €216bn a year. It also estimates that the tax could push as much as 90 per cent of European transactions off-shore and cost 478,000 jobs.
In an article for City A.M. Neil Bentley, the deputy director general of employers’ organisation the CBI, said a Tobin tax would have a “chilling effect on growth”.