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Anthony Browne

Anthony Browne: The financial transaction tax will be a tipping point for many British people

The mood in Europe has taken on an ugly tone, which has had a possibly counter-intuitive outcome: the EU's cheerleaders in Europe have become the best recruitment sergeants for British politicians who want to withdraw from the EU. The more bullying the rhetoric from French or German politicians, the more the British public are likely to conclude that the EU really is against us, and decide we should pull out.

Today, in an interview with the FT, Algirdas Semeta, the European Commissioner for taxation, tells the UK to join the financial transactions tax, and if it doesn't the tax will be designed in such a way that London will still lose out (it will be imposed wherever the transactions take place). Mr Semeta is a Lithuanian economist who no one in Britain has heard of (let alone voted for), who has been appointed to a position of great power, and is now telling us that the we have to accept something that is bad for us even though the democratically elected British government is totally opposed to it. This is disastrous for British public support for membership of the EU. The financial transaction tax shows the EU at its worst - just as the EU is fighting the deepest economic crisis in its history, it proposes a tax which the Commission itself admits will reduce european GDP. Just when the EU is seriously struggling to remain competitive with the rising powers of Asia, let alone America, it wants to impose a tax that will even by its own admission seriously damage our competitiveness.

But that doesn't matter - Mr Semeta says we should support it because it will be popular with voters. This is back to the 1930s - where a recession was turned into a depression because politicians imposed economically-runinous but electorally-popular policies (notably import tarrifs, slowing down world trade). The financial transaction tax is not just economically destructive, it is also very unfair - it will almost entirely fall on London, the EU's financial capital, while leaving the rest of Europe unscathed. Mr Semeta's native Lithuania, not a known financial centre, will barely pay at all. What joy there is in pushing taxes that only fall on other countries! Financial services aren't popular even in the UK, but people will I am sure still rally round if the EU is seen to be picking on Britain.

The danger from the EU's point of view is that the financial transaction tax will be a tipping point for many British people, pushing them over from irriration with the EU to wanting to pull out entirely. If the EU really do push it - and it could still prove a decoy to soak up all the UK's political capital - then it could prove the trigger that pushes the UK's withdrawal from the EU. It isn't what EU leaders want - or what I think is really in the UK's interest. But the costs of our membership of the EU are going up, while the benefits going down.


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