Proposed European Union Financial Transaction Tax Essay

Proposed European Union Financial Transaction Tax - Essay Example The general population and normal business ventures were to remain unaffected (Vella, Fuest and Tim, 2011). The proposed tax was to be separate from normal bank charge that some regional administrations are in the process of levying on monetary institutions to help in shielding them from the fees of any potential bailouts. Research has revealed that the tax has the potential of gathering about 58 billion Euros per year. However, the member states of the European Union are still undecided on whether to agree to the proposal (Beck, 2011:73). Great Britain is one of the states that are vehemently opposing the discharge of the FTT. The England admin has highlighted numerous reasons sustaining their negative stand on the concern. This figure represented about 37% of the total overseas exchange appeal in the world. In London, the dollar trade is two times as big as in America. In addition, the Euro trade in the city is over twice the amount traded in the whole EU region (Benton 2003:54). T he United Kingdom’s fiscal services sector is the leading industry in England, having overtaken the production sector in the 1990s. Evidence of this presents itself in the fact that, in the 2009/2010 financial year, the British government raked in 53.4 billion pounds in tax proceeds from the industry. This amount amounted to 11% of the total collection in the country. This amount is significantly larger than the sum of the country’s annual military budget, and is nearly equivalent to the country’s education budget allocation (Stevis, 2012). The county’s monetary services sector represents about 28% of the country’s entire sum of service-related exports, with the banks leading the charge. Due to its status as the biggest financial force, in consideration with all other European Union members, the country stands to be the biggest loser from the introduction of the FTT tax law (Bijlisma, 2011:485). According to the United Kingdom administration, the i mposing of the FTT tax law will greatly affect the overall country’s interest, including destabilizing the economy, and influencing the growth of volatility rates in its markets. In addition, the tax will not bring in any substantial returns. The country has presented to the European Union filed reports detailing the numerous potential damages and adverse effects that the law, if made operational, would inflict on it (The Telegraph, 2012). The government is afraid that the law will discourage derivative trade, increase trading-center volatility, and drastically lessen its markets’ liquidity ratios. In addition, they argue that the tax will lead to higher rates of unemployment, increase the tendency to evade tax among citizens, and greatly deplete the current amount of available tax proceeds (House of Lords.). Research on the potential impacts of the proposed tax has shown that the tax will affect the long-term growth in the EU by 1.75 %. This percentage, when broken do wn, implies to a cost of about 25.55 billion pounds to the UK economy (Boyle, 2009:342). However, the figure is just an average, and analysts forecast that the total sum could be far much larger, considering the country’s uncommonly outsized fiscal sector. In addition, research on the matter reveals that the tax would influence a fall of derivative transactions amounting to about 90%. The country’