Fin24

Cameron: Tobin tax must be global to work

2011-11-02 16:30

London - Britain believes a financial transactions tax will not be adopted in the short term and would work only if it were implemented on a global basis, Prime Minister David Cameron said on Wednesday.

Germany and France have been pushing for the introduction of a "Tobin tax" in the European Union but Britain is strongly opposed, fearing it will hobble its financial services industry and drive business away.

Cameron took a swipe at European partners for using the debate as a cover for reneging on their aid commitments.

"There is widespread support for the principles behind such a tax but it has to be adopted on a global basis," Cameron told parliament.

"We must be careful that we don't allow other countries, including some other European countries, to use a campaign for this tax that they know is unlikely to be adopted in the short term as an excuse for getting off their aid commitments," he said.

Hopes for a global Tobin tax - named after the US economist who first mooted it in the 1970s - have been dented by opposition from the United States and Canada as well as Britain.

The issue is likely to figure at the Group of 20 meeting of heads of government in the French city of Cannes which opens on Thursday.

Germany has spoken of pushing the idea with eurozone partners if Britain continues to object.

Support for the tax came from an unusual quarter on Wednesday when Archbishop of Canterbury Rowan Williams, head of the Church of England, praised it in an opinion piece in the Financial Times newspaper.

Williams has become embroiled in the politics of finance after anti-capitalism protesters set up camp on the steps of London's landmark St Paul's Cathedral, posing a dilemma for the hierarchy on whether to support them.

At a G8 summit in France in May, Cameron attacked fellow world leaders for forgetting about promises they have made to the poor.

Cameron has said Britain will be the first G8 country to hit a target of spending 0.7% of its national income on aid by 2013. Aid spending has been ringfenced at a time of deep cuts elsewhere.