6th July 2017
It is right that the financial sector makes a fair contribution to the public finances, which is why the bank levy has been introduced. However, that contribution needs to be balanced with consideration for the UK's global competitiveness.
In the UK, there is already a system of Stamp Duty which is paid on certain financial transactions. Indeed, there are carefully designed exemptions to avoid negative side-effects, and it only applies to shares in UK companies, meaning a proper geographical link is established. A broader tax on all financial transactions would damage growth and jobs, and the cost would ultimately be paid by businesses and pension-savers.
I am assured that Ministers continue to engage with international partners on this issue, but the Government believes any such tax would have to be applied globally. A unilateral measure would mean those transactions covered by the tax would simply be relocated to other countries, as has happened when similar measures have been implemented in other countries in the past, such as Sweden. I note that in relation to the proposed EU Financial Transaction Tax, only a minority of EU member states have expressed willingness to participate and no agreement has yet been reached.
It is, of course, crucial to raise money to fund our public services, but the best way to do that is to have a strong economy with a thriving business sector. For this reason, introducing a Financial Transaction Tax would ultimately be counterproductive.