European Parliament backs Tobin tax idea

Gherkin; City of London

Business digest: The move increases pressure on Brussels to consider the idea of a tax on bank transactions

LAST UPDATED AT 15:37 ON Tue 8 Mar 2011

The possibility of a Tobin tax on all transactions undertaken by banks based in the European Union has come a step closer after the European Parliament voted through a report in favour of the move.

The proposed tax, which would levy a charge of 0.05 per cent on each transaction, would raise up to E200bn a year. However, its introduction in the EU could have serious consequences for London as a financial centre.

Although the idea has support in some quarters it has been dismissed as unworkable by the International Monetary Fund unless it is adopted globally. And the UK government would not agree to any such tax unless it applied to banks in other finance hubs like New York and Hong Kong.

The report approved by the European Parliament has no legislative consequence as it was not introduced by the European Commission, but it does increase the pressure on Brussels to give serious consideration to the idea of a Tobin tax, named after economist James Tobin and also known as a 'Robin Hood' tax.

Read a full report in the Telegraph. · 

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