On 16 February 2012, Algirdas Semeta, the European Commissioner for taxation, appeared before the House of Lords EU Economic and Financial Affairs and International Trade Sub-Committee to persuade them of the merits of UK involvement with a European financial transactions tax (FTT).
The thrust of Mr Semeta's comments was that the effect of an FTT on economic growth would be a "negligible" 0.01 percent cut in annual growth, with approximately €57 billion being raised across the EU (€10 billion of which would be raised for the UK Exchequer alone). In fact, he suggested that any funds raised could contribute to growth in Europe by leading to a reduction in other taxes or increased investment in public services and infrastructure. This corresponds with the general view of the European Commission which, having revised its own initial impact assessment, now concludes that rather than leading to a reduction in GDP, an EU-wide FTT would actually have a positive impact on European economic growth.
In a recent article for the Daily Telegraph newspaper, Mr Semeta dismissed claims that an FTT would be utilised as a "backdoor way" of increasing the EU budget, claiming instead that extra revenue brought in by virtue of the FTT "would be offset by reductions in national contributions".
Mr Semeta's remarks contrast strongly with those of many in the financial services sector, in particular in the UK where the prominence of the City of London as a financial hub means a greater – and more vocal - interest in protecting financial markets. The UK Chancellor, George Osborne, said that he would veto an EU-wide tax, stating simply that "There are too many unanswered questions". Members of the House of Lords Sub-Committee were even more vehement in their opposition, claiming that the tax would force business outside the EU and the proposed extra-territoriality of the FTT would...