By Max Clarke
The subject of a Europe-wide financial transactions tax (FTT) emerged once more, as French President Sarkozy and Germany’s Chancellor Merkel met yesterday to discuss the future of the eurozone.
Financial markets dipped on the news, particularly the FTSE and Berlin’s Dax indexes, though non financial shares fared more favourably, preventing similar declines on Paris’ Caq.
Whilst the FTT is viewed by some as a means of discouraging risky trading and promoting stability, as well as a potential revenue stream, business organisations and traders have joined almost in unison to blast the proposals.
“To consider the introduction of a Financial Transaction Tax at a time when we should be totally focused on promoting growth is a mistake,” said Dr Neil Bentley, Deputy Director General at the Confederation of British Industry. “Such a tax could have the opposite effect, increasing the cost of capital for businesses and holding back their growth potential.
“This tax would divert transactions to other jurisdictions, like New York and Hong Kong, damaging the UK’s long-term competitiveness as a leading centre for financial services companies, and it is unlikely to raise significant revenues.”
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