I would be more concerned if Osborne stood alone. The good news is that Sweden, The Netherlands, Denmark and other EU countries have also said no to this tax. Let's hope they stand their ground.
The long-term difficulty is that Euro left-wing politicians, the news media and unions have done a great PR job in whipping up public support for the tax (i.e., against the financial industry). What the public doesn't understand is that just because it "seems" like a good idea, that doesn't mean that it "is" a good idea.
When I discuss taxes with FTT supporters, I bring up the 10% "luxury tax" on yachts that had huge public support in the US in 1991. But what seemed like a good idea to the public turned into an economic disaster.
American boat sales fell over 50%. Thousands of middle-class boat-building workers, sales people, administrative staff and managers lost their jobs. Factories that had been filled with American workers manufacturing high-quality products were suddenly empty.
What had been a booming US boating industry was decimated. The luxury tax on yachts, despite its overwhelming support from the public, did nothing but destroy middle-class jobs.
Adding insult to injury, the luxury tax also resulted in a net loss to the US treasury. In other words, the lost income taxes from the workers and boat businesses plus the cost of unemployment benefits was millions of dollars more than the amount of luxury tax collected.
In 1993 the tax was repealed. But not before the damage had been done. Thousands of middle-class workers had lost their jobs and scores of boating businesses were bankrupt or irreparably damaged.
The FTT will be no different. It will destroy jobs and never generate enough in taxes to pay for the damage it does.
Quote from listedguru:
This quote from the above article kind of bugs me:
"Britain has a veto over EU taxation proposals but EU officials suggest that it could be difficult for Mr Osborne to resist a measure billed as a tool to cut public deficits within the eurozone and more widely tackle the debt crisis."
From reading some of the comments after the article many feel that the UK will cave on this issue as I guess they have on many other occasions and issues.
I still feel that the UK won't cave on this issue as there is no upside (for them) in doing it. I just find that last quote from the piece interesting. If the UK were to cave Osborne and the entire Cameron goverment would look like a bunch of idiots after rejecting this tax all along, not to mention the G20 will never agree to this.
-Guru
