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BBC World Service

EU divided over bank transaction tax

Tim Bowler Sep 8, 2010
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BBC World Service

EU divided over bank transaction tax

Tim Bowler Sep 8, 2010
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TEXT OF STORY

STEVE CHIOTAKIS: The European Union continues to divide over plans to tax the banks there. The bank tax is supposed to curb financial risk-taking —
and help prevent a future financial crisis.

But the BBC’s Tim Bowler reports from London that, as with many European debates, this one has a number of different perspectives.


TIM BOWLER: The big stumbling block is taxing bank transactions. Tax supporters say that would help curb excessive risk-taking by adding some extra costs for short-term betting. However, opponents says banks would easily be able to avoid this, by shifting deal-making to other countries — particularly the United States, which has not introduced such a tax.

Dominique Barbet is from BNP Paribas.

DOMINIQUE BARBET: On the capital markets we’ve got so much liquidity and possibility of moving activity from one center to another, that it will be extremely difficult to tax financial activities.

Despite the dispute over the bank transaction tax, there is mostly agreement over taxing bank profits. And yet, even then, Europe has also failed to agree on where the money from an agreed upon tax would go. Germany wants the money to fund a rescue account, but Britain and France want the money to go straight back into their national budgets.

Despite the disagreements, Europe has in many ways gone further down the line than the U.S. Congress failed to back a plan to introduce a $19 billion tax on the profits of large banks and hedge funds.

In London, I’m the BBC’s Tim Bowler reporting for Marketplace.

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