UK diplomats have broken away from traditional British reserve by saying they would oppose a “bonkers” European Commission proposal for a Financial Transactions Tax (FTT), likening EU policymakers to “charlatans”.
The unusually heated comments came ahead of a meeting of EU finance ministers on Tuesday (4 October) that will provide a first opportunity to exchange views on the Commission’s FTT proposal.
“We will resist it because 85% of it [the financial industry] is in the UK,” said a senior British diplomat in Brussels who preferred not to be named.
“The last thing the eurozone needs is a proposal that is going to knock out 1.76% of GDP and cost quite a few jobs,” he added, speaking to the press on Thursday (29 September).
In his state of the union speech on Wednesday, European Commission President José Manuel Barroso unveiled proposals for a Financial Transaction Tax, saying it could generate some €55 billion per year for cash-strapped EU governments.
Barroso explained that the proposal was “a question of fairness” for EU taxpayers, who – via their national governments – had granted aid or guarantees for the financial sector to the tune of €4.6 trillion.
“If our farmers, if our workers, if all the sectors of the economy … pay a contribution to the society also the banking sector should make a contribution to the society,” Barroso thundered amid applause from lawmakers in the European Parliament.
But the British diplomat disputed Barroso’s claim that the tax could raise €55 billion, saying the Commission did not provide a credible analysis of the tax’s incidence on the real economy. “You can prove anything with statistics,” he said.
The diplomat did not rule out that Britain could sign up to a tax if it was applied at a global level but said it would not want the Commission in the driving seat. “We would accept something if it was global but we would want experts rather than charlatans to design it,” the diplomat said.
“It is just a bonkers proposal that undermines economic growth,” and which reflects a “populist interpretation of the crisis,” the diplomat added, in a rare display of exasperation.
“You can’t have tax without proper representation,” he concluded, referring to the Republican ‘Tea Party’ movement in the United States.