Following comments by Lord Turner, Chairman of the Financial Services Authority, Stuart Fraser, Chairman of the Policy and Resources Committee, City of London Corporation said:
“The Tobin tax was first put forward in 1978 so is hardly a new idea. The question remains if it is a ‘good idea’ why has it not been implemented? The effect of such a tax on economic activity is at best uncertain and at worse could put a serious restraint on global growth. The world is now much more complicated and interconnected with Asia playing an increasingly important role with a need to grow strongly just to feed and educate their people. Any such ‘global’ tax proposal would have to be judged against this backdrop.
“With the global community struggling to adopt a common approach to vastly more important areas such as climate change, free trade and human rights the chances of a new global tax on financial services being agreed and uniformly implemented are virtually nil. For Europe or the West to implement such a tax unilaterally would simply drive the financial services industry to the emerging centres in Asia, where they would be welcomed with open arms. Having lost most of our ‘traditional’ industries to the East it would be folly to push the one area where we are still dominant in the same direction.”