A new report released today by the Institute of Economic Affairs, The case against a financial transactions tax , argues the recent proposals for a Financial Transactions Tax (FTT) in Europe would be counterproductive and undermine Britain's financial services industry.
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 i