Posted by Tax Innovations on 13 Oct 2011

EU Admits Tax on Bankers May Cost 50,000 City Jobs

A European Union Commission assessing the effect of plans to levy a tax on bankers (financial trading) has admitted that the tax could cost tens of thousands of jobs.

The Commission has put forward the forecast that as much 70% – 90% of derivative trades will leave the EU or disappear and subsequently cause a fall in overall securities trading of 10%, resulting in a huge loss of jobs for the European derivative trading labour force.

The vast majority of derivative trading is done by; or on behalf of the banking industry and so the report is receiving two main reactions.

There are those in the ‘good riddance’ camp who believe it only fair that the bankers pay at least their fair share of taxes since it is widely believed that they are one of, if not the main reason that the global economy is in such turmoil.

There are then those that are somewhat more pragmatic, including the UK Treasury. Whilst they might not necessarily support the banking industry of late, they understand that rather than increasing taxes, the move might cause a decrease in revenue which could be a far greater loss to both UK and the EU economy.

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