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Cameron vows to block EU-wide Tobin tax

Jan 08 2012 14:13 Reuters

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London -  British Prime Minister David Cameron said for the first time on Sunday he would veto a European-wide financial transaction tax unless it was imposed globally, deepening a confrontation with European Union heavyweights France and Germany.

He said France should be free to go it alone and introduce a financial transactions tax if it wished.

Paris and Berlin have been pushing for an EU-wide tax of financial transactions but Britain has strongly resisted, fearing it will damage the City of London, a global financial centre where much of the tax would be raised.

Cameron’s threat to block the tax comes after he angered EU partners last year by vetoing a new EU treaty on greater fiscal integration in the eurozone that was aimed at defusing the euro debt crisis. Critics said his move risked leaving Britain isolated from the other 26 EU countries.

“The idea of a new European tax when you're not going to have that tax put in place in other places, I don’t think is sensible and so I will block it,” Cameron said in a BBC interview.

“Unless the rest of the world all agreed at the same time that we are all going to have some sort of tax then we are not going to go ahead with it,” he said.

EU-wide tax measures require approval from all 27 member states.

French President Nicolas Sarkozy vowed on Friday to push ahead with a new tax on financial transactions, also known as a Tobin tax, even without France’s EU partners, in the face of stiff British resistance.

“If the French themselves want to go ahead with a transaction tax in their own country, then they should be free to do so,” Cameron said.

He suggested other European leaders should copy taxes that Britain has on banks and share transactions.

“I would say to these other European leaders if you want to do what Britain has, we’ve got a bank levy so that the banks contribute properly, we have stamp duty on share dealings, you can do those things,” he said.

The EU’s executive European Commission formally adopted plans last September for a financial transaction tax.

Under the plan, stock and bond trades would be taxed at the rate of 0.1%, with derivatives taxed at 0.01%.

The idea will be discussed when Sarkozy and German Chancellor Angela Merkel meet on Monday in Berlin and at a meeting of the European Council in Brussels on January 30.

While France may push ahead alone, Germany and Italy have stuck to the idea of an EU-wide tax.

Cameron’s decision to veto the new EU treaty won him praise from eurosceptics on the right of his Conservative Party and brought him a boost in the opinion polls, but angered his pro-European junior coalition partners, the Liberal Democrats.

Britain’s Deputy Prime Minister Nick Clegg, the Liberal Democrat leader, hosts a meeting of his liberal allies from around Europe in London on Monday to promote his agenda of re-engagement with the EU after Cameron's treaty veto.

david cameron  |  tobin tax  |  banks
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