Why a Tobin tax won’t work

The proposed 'Tobin tax' - backed by France and Germany - won't work. What's more, it would be a disaster for Britain.

"Robin Hood tax, Tobin tax, fat tax. Call it what you will," says Laura Chesters in The Independent on Sunday. What matters is that proposals from Brussels, backed by France and Germany, for a financial transaction tax (FTT) to be introduced worldwide by 2014 have the support of high-profile figures including Bill Gates, the Archbishop of Canterbury and George Soros.

The tax would see a fraction of a percentage taken from each financial transaction, from hedging contracts to currency exchange. Its supporters say it is such a tiny levy it can't possibly hurt the banks. Detractors, including David Cameron and George Osborne, argue that if the tax is just Europe-wide, it will hurt Britain (where four out of five of Europe's financial transactions take place) disproportionately. Some banks may even leave.

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