More than nine out of 10 corporations and financial institutions around the world oppose government proposals to impose a tax on financial transactions, according to a Greenwich Market Pulse.
In Europe, French President Nicholas Sarkozy and UK Prime Minister Gordon Brown have aggressively pushed for the establishment of a ‘Tobin Tax’, named after Nobel-Prize winning economist James Tobin, who first suggested the measure. The proposed transaction tax, which also has the support of German Chancellor Angela Merkel, would be designed to generate funds for future crises.
However, prospects for the establishment of a global transaction tax received a setback recently when US President Barack Obama proposed a new tax on bank liabilities. Assuming that the US administration would not go so far as to levy both taxes on its banks, most observers have concluded that other countries will not act to saddle their own banks with a transaction tax in the absence of US participation. The UK’s Brown says he will continue pushing the proposal, which he says is “gaining traction around the world”.
Among the 330 investors and corporate executives around the world surveyed by Greenwich Associates from 11-15 January 2010, support for a global transactions tax tops out at 12% among corporates and financials in continental Europe. In other regions, opposition approaches 100%.
“In all regions, corporations and financial institutions believe the imposition of a Tobin/Transaction Tax would have a sharply negative impact on investment returns, market liquidity and pricing, and on companies’ ability to raise capital,” said Greenwich Associates consultant Andrew Awad.
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