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|Posted: Sat Aug 20, 2011 8:28 am Post subject: BRITAIN FACES 50 BILLION BILL TO BAIL OUT EUROLAND
|Britain faces £50bn bill under Brussels tax raid to bail out euro
By Tim Shipman
Last updated at 9:47 PM on 19th August 2011
Britain faces a £50billion bill under plans for a new tax raid by Brussels, according to a report.
That is the price the UK might have to pay if the European Union imposes a financial transaction tax demanded by France and Germany.
German Chancellor Angela Merkel and French President Nicolas Sarkozy want to impose the levy across the EU to help bail out the euro.
Friends: German Chancellor Angela Merkel and French President Nicolas Sarkozy want to save the euro
But the vast majority of the cash would be seized from institutions in the City of London – which the Government fears would lead to major banks and investment firms leaving to set up shop elsewhere.
The so-called ‘Tobin Tax’ or ‘Robin Hood Tax’ is just one of ten direct taxes that the EU is considering introducing.
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Eurosceptic think tank Open Europe has issued a report which concludes that each and every one of them is ‘economically flawed and unworkable’.
Open Europe has calculated that a financial transaction tax would cost financial markets across the EU between £20billion and £69billion.
target: A tax on financial transactions would raise cash from businesses in the City of London
Thanks to the dominance of London as a centre of Europe’s financial services industry, Britain would end up paying the lion’s share – between £15billion and £49.9billion.
The sums were calculated on the basis of European Commission calls for every bond transaction to be taxed at a rate of 0.1 per cent and derivative deals at 0.01 per cent, using figures on the scale of transactions compiled by the international watchdog, the World Federation of Exchanges.
Open Europe said the wide range between the high and low estimates is ‘due to uncertainties regarding the degree of relocation and evasion following the introduction’ of a financial transactions tax.
‘The introduction of an FTT at the EU- or eurozone-level, without a global agreement would lead to the relocation of financial firms away from European financial centres – something that would be particularly damaging for London, Frankfurt or Paris.’
Proposal: European Commission President Jose Manuel Barroso
The European Commission is drawing up plans for new direct taxes to keep swelling EU coffers while governments throughout the EU are groaning under debts and facing austerity cuts at home.
The EU budget shows that the Commission also wants an EU-wide sales tax like VAT, to raise £25billion a year by 2020.
Eurocrats have also drawn up plans for a European bank levy, an aviation tax, higher excise duty on cigarettes and alcohol, a separate financial activities tax, an EU corporate income tax and at least three different carbon taxes.
In each case Open Europe - which does not advocate British withdrawal from the European Union - concludes the taxes proposed would be too complex or would punish some countries disproportionately ad in several cases would not be worth the effort, because they will drive companies away from Europe, meaning tax take would fall.
Open Europe’s Research Director Stephen Booth said: ‘While some of the options offer minor benefits, every attempt to give the EU the power to raise its own taxes would be perceived as a major assault on national governments’ tax sovereignty and, ultimately, democratic accountability. EU taxes would have no democratic legitimacy.
‘However, all of the potential options for an EU-level tax also fall short on practical and economic grounds and are either prohibitively complex or come with a hugely disproportionate cost for certain countries, social groups or businesses.
‘The Commission’s push for EU taxes specifically to fund the EU budget ignores the fact that the current complexity and opacity of the budget has more to do with its size and the logic underpinning the EU’s spending programmes than how it is financed.’
The Treasury have vowed to prevent an EU-wide transaction tax if it threatens the City but said they would examine the specific details if one is formally proposed.
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