Clegg tells Europe to forget Robin Hood tax
Yesterday George Osborne delivered a robust message to European finance ministers on a proposed new tax on the City. Bluntly put, his view was "forget it".
Now Nick Clegg, the most high-profile pro-European in the Cabinet, has popped over to Brussels to hammer it home.
As part of a speech warning that Europe must "reform or wither" he also said a continent-wide financial transaction tax (FTT) would unfairly hit Britain and be passed on to those who can least afford it.
Here's the relevant passage: "We cannot support the European Financial Transaction Tax that has been proposed.
"It would have a massively disproportionate impact on the City of London, responsible for more than half of the revenues that would be taxed. And, according to the Commission’s own analysis, it would also reduce EU GDP as a whole.
"But even for people who don’t care about the City of London or Europe’s economic performance, the FTT doesn’t make sense because it completely misses its target.
"This isn’t – as it’s often presented – a painless tax on banks and City speculators, the authors of the financial crisis. In reality bankers will be left sitting happily unaffected in their offices, passing on the charge to the people they are acting for.
"It’s pensioners who will pay this tax, and businesses. Companies that are vital to our economies, that are big engines of manufacturing or retail, that employ thousands of people across Europe, but just happen to do financial services business too.
"That is in no ones’ interests."
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Another U-turn for Nick Clegg, whose election manifesto promised to "bring forward urgent proposals" for this tax.
If Clegg is sincerely concerned that it will impact the City's competitiveness, he would be working for its introduction on a global basis. It makes sense: in a globalised economy, it makes sense to have a globalised tax system.
Posted by: Richard Lawson | 11/11/2011 at 11:24 AM
If it's pensioners and businesses that will pay this tax, how is that didn't stop Clegg imposing the bank levy?
Posted by: Richard | 11/11/2011 at 11:39 AM
Clegg often comes over as the EU’s representative in the cabinet. As he receives a revocable pension from the EU surely he should declare a financial interest whenever he speaks on the subject? I would make the same comment about Kinnock in the Lords and Patten, the BBC chairman.
Posted by: James J | 11/11/2011 at 11:41 AM
I wish I could forget Clegg!
James J above is spot on when he reminds us that Clegg, Kinnocks by the dozen and 'Any Job At All' Patten, are all contractually bound to 'be nice about the European Soviet Union' or lose their pensions!
Posted by: David Davies | 11/11/2011 at 01:58 PM
Thanks again, Nick.
You didn't have the same concerns for pensioner's wellbeing or 'proportionality' when VAT was raised to 20%.
A 0.05% tax on derivatives trading is hardly disproportionate given the liabilities we have incurred as a society since 2008 because of riskier financial activities being incorrectly managed.
And as for this defeatism that bankers will pass the costs on to the customer - you are trying to be a leader. You are SUPPOSED to be inspiring the public to get behind the policies of the Liberal Democrat Party. What you are doing, in effect, is rolling over on your back and giving in to the banks, telling those who voted you in on the promise of FTT that they are too powerful to be taxed even a minute sum in order that the rest of society may benefit.
I honestly have no idea who to vote for in the next election if even the Liberals cannot get behind this motion.
Posted by: Kevin Wales | 11/14/2011 at 01:28 PM
Clegg delivers what should be a "mustard sharp" comment like lard wrapped in cotton wool.
No FTT You sort your own problems out !!! Simples :)
Posted by: arnaud sachsen | 11/14/2011 at 02:32 PM
No FTT You sort your own problems out !!! Simples :)
Okay! Let's let the banks sort their own problems out and remove their implicit taxpayer subsidy.
I don't imagine there would be as much call for FTT had RBS, HBOS, Lloyds TSB etc. succeeded in 'sorting their own problems out' without taxpayer intervention in 2008.
0.05% is a laughably low premium on a high risk activity. We're happy enough to tax smokers and drinkers for the inherent risks in each of *those* activities, why the double standard?
Posted by: Kevin Wales | 11/14/2011 at 02:53 PM
They're both mad, or bought: Osborne can make a transaction tax revenue-neutral by cutting dividend tax at the same time. This would reward proper investors and penalise speculators at one stroke. It would also attract SE listings in London from bourses overseas: for no company likes its shares used as gambling chips. Or he can impose the tax only after a certain minimum period of holding the share.
Clegg is such a poltroon nobody can take anything he says seriously, but Osborne's stance shows he has been taken over by the speculators. Value investors need to beware what he will do next.
PS: 'I honestly have no idea who to vote for in the next election if even the Liberals cannot get behind this motion.'
UKIP, Kevin: they may be Tories, but at least the decision-making will come closer to home, with a greater chance of our voices having weight. Otherwise the entire political class of the future will be Cleggs, which is too close to the truth already.
Posted by: mdj | 11/17/2011 at 02:52 PM