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23 Aug 2011
LONDON-BASED broking giant Icap will quit the European Union if a Tobin tax on financial transactions is introduced, its chief executive has said.
Michael Spencer, a former Conservative Party treasurer, told the Independent on Sunday that such a levy would "destroy the City". This is the first such threat made by the company, despite threats from other businesses to move because of the 50p personal tax rate. The business currently employs around 1,800 people in the UK and 4,500 worldwide.
Spenser said: "This tax would destroy the City and cost the Exchequer billions, but it would benefit Brussels. Companies like Icap will simply move elsewhere outside the EU if [French president] Nicolas Sarkozy and [German chancellor] Angela Merkel push ahead with this silly tax."
The tax is a "cynical threat" by Sarkozy to hit London's foreign exchange, equities, commodities and derivatives markets, Spenser added. "It would also be a huge fillip to New York and other centres like Singapore. It could only work if adopted globally."
The plans are set to be tabled at an EU meeting in September. The UK and the Netherlands are said to be opposed to the plans.
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Visitor comments Add your comment
Cynical threat or bold step forward?
Extract from robinhoood.org website:
Won’t companies just avoid the tax or move their businesses offshore?
This is a common and misguided criticism, and one that’s easy to answer.
The short answer is no. As the IMF says, financial transaction taxes (FTTs) “do not automatically drive out financial activity to an unacceptable extent”.
FTTs can be designed so that they are very difficult to avoid. The best example of this is the UK, where we have a stamp duty of 0.5% on all share transactions. The UK’s major competitors do not have this and there certainly is no global agreement, yet it is a successful FTT that raises around £5 billion pounds each year. It is designed so it can’t be avoided and London remains one of the biggest stock markets in the world.
There are many reasons banks would not leave the UK, not least that they need a big enough government that they know will bail them out if things go wrong. There are not many governments with the ability or willingness to provide this implicit guarantee, certainly not the Cayman Islands or even Switzerland...
Posted by: JohnT, 23 Aug 2011 | 11:57
It is a threat
JohnT, the Stamp Duty works because only investors pay it - market makers and the guys in the City are exempt from that tax.
If you want to day trade in the UK you've got to use futures. With the stamp duty, stocks would ruin you.
Posted by: Yosako, 28 Aug 2011 | 15:12