EU: Eurozone Financial Transaction Tax Debate

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Department: HM Treasury

EU: Eurozone Financial Transaction Tax

Lord Eatwell Excerpts
Tuesday 5th March 2013

(11 years, 8 months ago)

Lords Chamber
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Lord Newby Portrait Lord Newby
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My Lords, I am sure that many noble Lords share that aim. The question is whether such a tax would have that impact, and the academic work on it is ambiguous at best.

Lord Eatwell Portrait Lord Eatwell
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Will the noble Lord explain why the Government are so allergic to the financial transaction tax, which is to be levied at less than 1% of the value of transactions and by many countries, whereas we are quite happy to have stamp duty levied on transactions at 5%, which is effective only here in the UK?

Lord Newby Portrait Lord Newby
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My Lords, we have some examples of where this kind of thing has been done in the past. In 1989, Sweden introduced its version of an FTT and in the first week the volume of bond trading fell by 85%, even though the tax rate was only 0.003%. The volume of futures trading fell by 98% and the options trading market disappeared. Not surprisingly, Sweden is not now supporting the idea of a Europe-wide FTT.