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Should transaction tax fund a British investment bank?

Think tank IPPR has advocated the creation of a British Investment Bank using a wider taxation on financial transactions.

A new report, due to be published next week will say Britain should follow suit with 11 other EU countries who have signed up to a financial transaction tax on shares, bonds and derivatives, in a bid to return the UK to sustained growth.

IPPR estimates that such a tax could raise £20bn, half of which it says should be used to capitalise a British Investment Bank for a number of years.

SMEs and infrastructure projects could gain funding from the bank, according to IPPR, while in the short term, excess funds could be put towards the deficit.

Furthermore, the think tank’s report showed the UK’s stamp duty on shares brought in just £2.8bn last year, in comparison with £4.2bn before the financial crash in 2008.

IPPR said stamp duty should be extended to cover all trading of bonds and equities at 0.1% and the trading of derivatives at 0.01%.

Currently, more than 30 countries have a tax on financial transactions, with a 0.0013% U.S. tax on equities, and similar systems in China, France, India, Switzerland, Russia, and many more.

IPPR’s chief economist, Tony Dolphin, commented: “This week, Business Secretary Vince Cable made the case for kick starting economic growth by investing in infrastructure projects while the Prime Minister made the case against unfunded tax cuts and borrowing for spending.

“This new report makes the case for raising revenue, tackling the deficit and investing for growth. There is an alternative, and this is it.

“The British economy needs new economic priorities and economists must expose the political fantasy that the only options are more borrowing or deeper cuts. We can raise more revenue, tackle the deficit and kick start economic growth at the same time.”

This was posted in Bdaily's Members' News section by Miranda Dobson .