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The Government do not support the European Commission's proposal for a financial transaction tax.
The European Commission's own impact assessment of the proposal highlights significant detrimental impacts on the European Union (EU), including a reduction in EU GDP between 0.17 per cent and 3.43 per cent. It is difficult to disaggregate this figure to the UK only. However, it is clear that, given that the UK has the largest financial sector in the EU, the UK economy could expect to see a disproportionate impact compared with other EU member states.
Agreement to a directive on a financial transaction tax would require unanimity in the Council of Ministers, giving the UK Government a veto over any such proposal. Therefore, such an EU tax cannot be imposed on the UK without the UK's agreement.
While the Government could support a global financial transaction tax, the Government oppose an EU-only financial transaction tax.