A well designed Europe-wide financial transactions tax could be a powerful source of revenue for the EU budget

What would be the implications of a financial transactions tax in Europe? While the French argue such a tax would help stabilize the debt crisis, the British believe that the instrument would prompt an exodus of financial activity to other parts of the world. Iain Begg argues that the latter argument may not hold, and that the tax could become a source of revenue for governments if introduced as a ‘tax for Europe’. There has been much debate in recent months about a financial transactions tax (FTT), with some Member States, notably France, very keen to see its introduction, while others are more sceptical. Given the prominence of the City of London in its economy, the UK, not surprisingly, is opposed to the introduction of such a tax in the European Union because of fears that it would prompt an exodus of financial activity to other parts of the world. For the UK, the argument is that unless a global FTT (which it claims to support) can be introduced, imposing such a tax unilaterally in Europe would be tantamount to an own goal.