We already have a tax on financial transactions at 0.5%, stamp duty, – why not modify to to extend to all commercial financial transactions at an even lower rate and yet raise more.
Currently, 11 member states of the union including France, Germany, Italy and Spain are about to introduce an FTT. The revenue will not go to Brussels but to their own Exchequers and, if all assets discussed are included, it has the potential to raise in the region of £30 billion a year.
That money could be used to pay back the cost of bailing out the financial sector and the on-going problems the global financial crisis caused, as well as ensuring that international commitments to combat global poverty and climate change are met.
The financial sector can certainly afford this tax – which would be charged at a fraction of 1% on finance firms rather than individuals – in the same way that it has borne tens of billions in fines due to a host of misdemeanours from product mis-selling to rigging currency rates. Moreover, an FTT would improve the financial system by abating short-termism and reducing destabilising activities such as High Frequency Trading.
It is often forgotten that the UK currently has an FTT – the 0.5% Stamp Duty on share transactions, which successfully raises £3bn a year. I think the UK should extend our existing FTT to other financial transactions, joining other European countries, to regulate and tax the financial sector more.