TUC calls for £100bn bank tax
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The Trade Union Congress is calling for the introduction of a new financial transaction tax, which it says would raise around £100bn a year.
A report, published by a coalition of organisations including the TUC, titled Taxing Banks, proposes a 0.005 per cent tax on foreign currency exchanges.
Prime Minister Gordon Brown (pictured) has previously proposed levying a transaction tax on banks – known as Tobin tax.
The TUC says this could be easily collected through the Continuous Linked Settlement Bank or the Real Time Gross Settlement mechanisms that are run for all major currencies by their central banks.
The tax would raise an estimated £21bn a year worldwide and not disrupt financial markets, according to the report, which has been submitted to the International Monetary Fund.
The report argues that a 0.005 per cent global tax on derivatives trades, which are worth thousands of trillions of pounds annually, could also be introduced quickly and raise an estimated £76bn a year.
A major advantage of transaction taxes on currency exchanges and derivatives trades, according to the report, is that they are hard to avoid. It says an insurance levy would encourage further tax avoidance because banks would move their assets and profits offshore to avoid such a charge.
TUC general secretary Brendan Barber says: “Everybody in the world is paying the price for the global recession the banks caused through lost jobs and homes, less money in their pockets or having less food to feed their families.
“But rather than suggest ways to address the damage they have caused, the response of most financial institutions has been to say that no transaction tax, no matter how small, could ever work.
“Our report shows that taxes on financial transactions can be implemented quickly, unilaterally and raise substantial sums without causing any difficulties to the financial markets.”
A British Bankers’ Association spokesman says: “The report is called Taxing Banks, but this is no more a tax on banks than fuel duty is a tax on oil companies.
“The idea as we understand it is that banks pay a tax every time they conduct a financial transaction with another bank. The banks already collect taxes for the Government in this way, for instance stamp duty on share transactions. This would simply be another such tax on the customers who conduct the most cross-border transactions - in this case our major manufacturers and exporters.
“The prospect of a globally-implemented tax of this kind is remote. It is a thought experiment, which many academics have discussed in recent years but which no-one has been able to implement practically.”
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