As you may be aware the Liberal Democrat manifesto at the last election stated that Liberal Democrats would work with other countries to establish new sources of development financing, including bringing forward proposals for a financial transaction tax.
This position has not changed since we entered government and we continue to support a financial transaction tax in principle. However, the tax would not raise sufficient monies if it were introduced on a unilateral basis. To counter avoidance, it would have to be introduced across all of the major financial centres, including London, New York, Hong Kong and Singapore. Although the introduction of an FTT within the EU alone may appear attractive, as it would embrace transactions in London, Paris and Frankfurt, it would almost certainly lead to a major diversion of trade to North America and the Far East, with London being the biggest loser. One EU Member State, Sweden, introduced a variant of the FTT and saw an immediate switch of business to London. The tax was thus a double disaster as it failed to raise revenue and caused a loss to the Swedish economy.
It is important to also note that the proposed FTT in the EU would provide a direct ‘own resource’ for the EU budget and there is no consensus on what this would fund. While the EU does have an aid programme, most of its budget (approx 40%) is spent on the Common Agriculture Policy (CAP). Many campaign groups believe that CAP is bad for fair trade and have lobbied against it. An FTT for the EU would thus have the perverse effect of supporting a project that goes against the beliefs of the charity which has campaigned so vigorously in favour of it – Oxfam. One of the Coalition Government’s policies I am most proud of is our commitment to spend 0.7% of our gross national income on international aid, a goal the UK has failed to reach since was set in 1970.
The Coalition Government remains committed to ensuring that banks and bankers contribute to the economic recovery, this is why we announced the annual levy on bank’s balance sheets. . It will apply to both the global balance sheets of UK banks and the UK operations of banks from other countries. Once fully in place, the levy is expected to generate around £2.5 billion of annual revenues.
My Liberal Democrat colleagues and I continue to support the Robin Hood campaign’s aims. We have taken action to meet our international aid commitments, taken one million people out of paying income tax and increased taxes on banks and bankers through our bank levy and increase in capital gains tax. Please rest assured that we will continue to fulfil our manifesto commitment to work towards a global financial transaction tax.
Thank you again for contacting me about this important issue.
Nick Clegg MP"
To which I raise the following issues:
1. Is Sweden considered an influencial financial centre like the City?
2. Is Frankfurt not considered a financial centre? Why have both Angela Merkel and Sarkozy agreed to a transactions tax (despite being from the right of their respective political arenas?)
3. Whilst there is not yet agreement on how the revenue would be spent, is that a reason for writing it off as a policy?
4. As a side point, how much of the £2.5bn 'generated' from the bank levy 'once it's in place' will be spent on jobseekers allowance from the multitude of public sector workers facing the sack in the next few years.
So... so many other points. The idea that the UK is fully behind 'fair trade'. If we were behind that, we would not support the IMF. I shouldn't get wound up by a fucking tory shill like Clegg, but he's my MP - its my privilege.