West Midlands Lib Dem Euro MP Phil Bennion has spoken out against a proposal for a European financial transaction tax which was voted on at the European Parliament today.

Phil Bennion MEPPhil Bennion, who recently took over as local Euro MP from Liz Lynne, voted against the plan, which has been dubbed the 'Robin Hood Tax.'.

An EU-wide financial transaction tax was put forward by the European Commission last September and will also be discussed by EU leaders at an informal summit this week. The UK will have a veto.

The tax would be levied on all financial transactions, not just banks, including those made by insurance firms and ordinary companies which use financial transactions to try and reduce the risk to their assets from unexpected economic problems and stock market crashes.

Phil Bennion, who helped plan the Lib Dem policy to cut income tax for the low paid during his stint on the party's policy committee, said the transaction tax was not the answer many campaigners hoped for.

"I can understand how desperately people want to stop speculators and abuses by investment bankers, but this plan for a European transaction tax isn't the answer.

"It would not just affect banks, but ordinary companies vital to jobs in our region, from supermarkets to manufacturers. The extra cost will have to be passed on through price rises, higher insurance bills or cuts in investment.

"Even worse, if it is only introduced in the EU, the bankers it is meant to hit can easily move the 'point of transaction' from Britain to New York or somewhere and dodge it.

"At present a very high percentage of financial services business is based in Britain and we do get a lot of tax revenue from it. Without a global tax, these businesses would move and the net result for the UK government would be less tax revenue, not more, possibly many billions less.

"An EU financial transaction tax would end up as a stealth tax hitting the man and woman in the street first and foremost. Sadly, it has more in common with the Sheriff of Nottingham than Robin Hood.

"It is a shame that the idealists behind this plan, whose aims I share, have not thought it through. Instead I want to see an EU crackdown on bank bonuses and excessive pay.

"Another practical measure would be to remove the voting rights from institutional shareholders, especially for deciding remuneration packages and pay policies. So many companies own shares in other companies that in effect company directors have a bloc vote on each other's pay and bonuses.

"No wonder they are spiralling out of control despite the recession. I don't want to stop companies owning shares but we need to confine decisions like this to individual shareholders. Shareholder democracy could be very powerful."


Note to Editors: The (draft) report by the Committee on Economic and Monetary Affairs can be read here: http://www.europarl.europa.eu/sides/getDoc.do?type=REPORT&reference=A7-2012-0154&language=EN&mode=XML