Cable voices transaction tax ‘case’

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Business Secretary Vince Cable has told MPs that he believes “there is a case” for introducing a financial transaction tax.

Despite fierce Government opposition to European moves to introduce such a levy, the Liberal Democrat Cabinet Minister said he was “quite disposed” to use it as a way of trying to change behaviour in the financial sector.

“I have got no objection to the... well, I would put it more positively – I think there is a case if you are trying to change behaviour from using a market instrument of that kind to make it happen,” he told the Commons Business, Innovation and Skills Committee.

The European Commission has tabled controversial plans for an FTT despite opposition from several member states, including the UK. It will apply to transactions involving shares, bonds and derivatives and could raise up to 35bn euros (£30.2bn) a year.

The UK opposed the scheme and will not participate, but is currently studying the draft proposals to assess the possible impact on the City.

Mr Cable added: “The reason why the British Government has been pretty negative about it is mainly on grounds of practicality and the other reason we have been sceptical about it, of course, is that most of the revenue would be generated in the UK and under the European Union’s proposal would be repatriated to Brussels, which understandably, we are not too happy about.”

The “Tobin” tax is named after the economist who devised it.