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UK Chancellor slams “suicidal” FTT

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UK Chancellor of the Exchequer George Osborne has denounced the European Commission’s plans for a financial transactions tax (FTT) as suicidal for not just the UK, but the EU as well.

The Commission came forward with proposals for an EU-wide FTT in September and the tax has strong support from France and Germany. The UK, however, has always been staunchly opposed and Osborne’s comments show that it has not wavered.

“Proposals for a Europe-only financial transactions tax are a bullet aimed at the heart of London,” Osborne said in article for the Evening Standard newspaper. “The ideas of a tax on mobile financial transactions that did not include America or China would be economic suicide for Britain and for Europe.”

Kevin Cummings, a tax partner at Berwin Leighton Paisner agrees with Osborne’s assertion, arguing that it is not in the UK's interest to be part of a transaction tax that is limited to Europe because the country will take a disproportionate economic hit.

Cummings, however, does believe that the conclusion of the Gates’ report has made the tax much more likely, where previously he had been sceptical of the Commission’s proposals.

“There are few who can argue with Gates' call for countries to sequestrate funds for development causes - and with Bill Gates behind the cause, the prospects of a FTT seeing the light of day turn from merely possible to quite probable,” said Cummings.

Cummings was critical of Gates’s objections to UK opposition to the tax, however.

“I'm not sure Gates' is right to pour cold water on the UK's objection to an FTT on the basis that the UK already has a stamp tax regime for equities - given the much wider base of the FTT (equities, bonds, derivatives, repos and economic equivalents), the comparison is not perhaps a fair one,” said Cummings.

Roger Kaiser, senior adviser for tax and financial reporting at the European Banking Federation, is less confident given the difficulty of EU member states negotiating with third countries to extend the tax.

“There’s no way it’ll happen globally at the moment,” said Kaiser.

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