Commenting on the news that the City of London is set to be granted an exemption from new global tax proposals for multinational companies, Julian Jessop, Economics Fellow at free market think tank the Institute of Economic Affairs, said:

“It is right to exclude financial services from the new global tax rules, but this also illustrates several flaws in the overall plan.

“Banks typically have to hold large amounts of capital in the overseas markets in which they operate, and are already subject to plenty of local regulation and tax. 

“The proposals adopted at the G7 could simply redistribute revenues in a pretty crude way between countries – and not necessarily to the UK’s advantage – rather than increase the overall take.

“However, similar arguments could be made for many other sectors. There is therefore a danger that the City gets special treatment.

“At least it seems likely that the Digital Services Tax will go. This was always a bad tax, driven more by politics than economics, and far more trouble than it was worth.”

ENDS

Notes to editors

Contact: Emily Carver, Head of Media, 07715942731

IEA spokespeople are available for interview and further comment.