New IEA research released
Key findings of the report:
- The FTT looks like an exercise in European Commission self-interest. This is an excuse for the Commission to get more money directly in a way that will make it less accountable. A high proportion of that money will come from Britain.
- It is highly likely, that no net revenue would be raised by the FTT as it would shrink the overall economy, according to the Commission’s own estimates, by nearly 2%
- The costs of the FTT would ultimately be borne by consumers of financial products – future pensioners, mortgage customers and so on.
- The FTT is likely to increase volatility by reducing liquidity and the ability to hedge – the opposite of what proponents claim.
- It would not help address any of the Eurozone’s current problems – it is a deliberate distraction from them.
- An FTT would not help reduce the likelihood of a future financial crash.
- If the FTT is not agreed on a global scale we would see trading relocate to other areas of the world.
Commenting on the report, Mark Littlewood, Director General at the Institute of Economic Affairs, said:
“This tax was conceived through resentment, then supported by narrow self-interest and is now being considered in desperation. It offers nothing to improve the security, stability or profitability of financial services, a crucial sector of the United Kingdom’s economy.
“Of all the things you could tax, to choose to penalise the goose that lays the golden egg is utterly wrongheaded. We must not let anger about the financial crisis lead us to adopt policies in a blind fury with serious, negative consequences on the economy for years to come.”
Prof. Philip Booth, Editorial Director at the Institute of Economic Affairs, said:
“A transactions tax is the worst kind of tax imaginable. Eating away at its own base it will undermine financial markets and leave consumers, including pensioners, to pick up the tab.
“It is a self-interested gimmick that is being pushed by the European Commission at the worst possible time. By the Commission’s own estimates it would probably raise no money but would divert resources from the nation states to Brussels.”
Notes to editors
To arrange an interview with Mark Littlewood (Director General of the Institute of Economic Affairs) or Prof. Philip Booth (Editorial Director at the Institute of Economic affairs) please contact Stephanie Lis, Communications Director, [email protected] or 077 5171 7781.
The full report The case against a financial transactions tax by Tim Worstall can be downloaded here.
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems. The IEA is a registered educational charity and independent of all political parties.