Unit 4 Macro: EU proposes a “Tobin Tax”

This morning the EC has proposed a financial tax (akin to a Tobin Tax) although going further to encompass various financial transactions, not just currency ones.

Unsurprisingly, the UK will be hit hardest by this with over 80% of the revenues for this tax (estimated to raise £50 bn a year) to come from London, given its comparative advantage in financial services.

Is this really a feasible concept, in a globalised world, with mobile financial flows and footloose capital?

Cue the drain to U.S for many firms if it becomes a reality?

Bill Nighy appeared in this video last year supporting the idea of a tax on financial transactions.

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