EU: Financial Transaction Tax (EUC Report)

Lord Hamilton of Epsom Excerpts

Tuesday 17th December 2013 Grand Committee

[Lord Hamilton of Epsom (Con)]

My Lords, one of the reasons given for the introduction of the financial transaction tax is to punish the banks. This is a populist idea into which, I am afraid, our Government have also fallen. We do not want to punish the banks, we want to punish the bankers. The problem is that the bankers have all now gone, taking with them their bonuses and severance pay, and we are left with the banks, which we want to rebuild and whose balance sheets we want to get stronger. Instead, we impose levies on them and ask them for better borrowing ratios and to build up their reserves. When they are trying to do this, as well as dealing with a loan book that is looking a bit dodgy, we then complain bitterly that they are not lending to small and medium-sized enterprises. I am afraid that you cannot have it all ways round and we have to do something to encourage our banks to strengthen their balance sheets rather than tax them, which is of course what we would be doing with the financial transaction tax.

This morning we were debating in our committee what the priorities were for the EU. One of the areas identified was tackling the serious problem of unemployment, which looks to be structural in the EU today, and in particular the very high levels of youth unemployment. So what do we do? We introduce the financial transaction tax, which seems to be coming down the road and, according to an impact assessment conducted by the Commission, will cost 1.76% of gross domestic product in the EU and 500,000 jobs. Since then, the Commission has said, “No, that is not accurate”. Okay, I will take half of that: perhaps we will see GDP depressed by 0.85% and it will cost only 250,000 jobs. That is all right then, isn’t it? It will cost a fortune and do everything to counter the objectives of the EU such as bringing down unemployment—it will actually increase unemployment. This is the extraordinary way that this Commission operates.

Many of your Lordships have been to Brussels. Do we ever hear the people in the Commission talking about how they will make the EU more competitive and how they will deal with the challenges from the global marketplace? No, they are always talking about themselves and as if the EU were the centre of the universe, which to an increasing extent it is not. The EU is facing up to a diminishing share of world trade as time progresses, and it is time that it started to look outwards rather than inwards, and work out how it will face these challenges. The impact assessment thoroughly analysed that a lot of this business will be pushed abroad, and that is why it will cost so many jobs.

We then questioned the gentleman from the Directorate General of Taxation and Customs Union, did we not? We asked him, “What are you going to do about getting these other stock exchanges and so on to collect this tax?”. “Oh”, he said, “We are going to incentivise them to collect this money”. We said, “Really? How are we going to do that?”. He said, “We will allow them to keep the interest on the tax that they have collected for six months”. What world is this so-called intelligent man living in? Does he really think that the United States will collect taxes for foreign countries? It is quite unbelievable, and this is the real problem behind all this. I cannot imagine why anyone would want to stay in the EU, and I am glad that we will have an opportunity to get out of it in 2017.