Christian Noyer, governor of the Bank of France, said the FTT posed a very real “risk” to the economy if not implemented correctly. France was one of a splinter group of 11 European Union countries to decide to press forward independently with a so-called Tobin tax earlier this year.
The UK has opposed the move, which Sir Mervyn King, Bank of England Governor, said earlier this month does not even have the unqualified backing of the 11 members adopting the levy. He claimed there was “enormous skepticism” even among politicians in countries signed up to it, adding that he could “not find anyone within the central banking community who thinks it is a good idea”.
Mr Noyer’s comments appeared to confirm Sir Mervyn’s analysis. Mr Noyer, who is also on the European Central Bank board, said: “It will be essential to define the base, interest rates and scope of a possible financial transaction tax in order to prevent the risk of destroying entire segments of our financial industry or the offshoring of jobs, as well as the highly counterproductive effects on government borrowing and the financing of the economy.”
Under the current plan, a 0.1% levy would be charged on equity and debt transactions and a 0.01% tax on derivatives. Germany, France, Italy and Spain are among those that have agreed to the plan, which the European Commission expects will raise €35billion a year and hopes will be in force by 2014. (Daily Telegraph)
To prevent business moving abroad, the FTT carries an “extra-territoriality” clause that would see the levy imposed on any euro-denominated transaction, even in countries that are not signed up to the FTT. The UK is challenging the decision in the European courts, and the US and other countries have vowed to block it – which would almost certainly make the FTT unworkable.
Bank of France head
The President of the French Central bank the Bank of France Christian Noyer has warned that the planned financial transaction tax the FTT will cost jobs in the EU if implemented.
The United Kingdom’s Prime Minister David Cameron opposes the Financial transaction tax and the UK has taken the EU to court over its implementation which would affect the city of London severely.
The EU has eleven nations that agreed to the financial transaction tax which was pushed forward by Germany and opposed by the UK and Luxembourg in the courts.