Ministers told to 'get serious' on transaction tax

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Labour has lost a vote to force the government to support the principle of a financial transaction tax.

MPs rejected an amendment urging the UK to work with global financial institutions to reach consensus on the design of a "modest" tax on financial transactions, by 96 votes.

Shadow Treasury minister Chris Leslie said it is "an idea whose time has come" and called on the government to "get serious".

But Treasury Secretary Greg Clark said it was for national governments to determine their own tax policies, during a debate on economic and monetary union on 18 June 2013.

MPs were debating reforms aimed at increasing economic and monetary union within the EU and to pave the way for greater co-operation in establishing a FTT.

The UK has opted out of the European-wide measure, claiming it would damage the City of London.

The government has applied to the European Court of Justice for the annulment of a European Council decision authorising a FTT under the enhanced cooperation mechanism.

Mr Clark told MPs the EU proposal would hit pension funds and savers while increasing companies' and governments' financing costs and reducing European competitiveness.

Shadow Treasury minister Chris Leslie agreed the EU variant of a FTT was not "optimal", but he said the UK could lead the way in working with other financial institutions, particularly the US, to develop a better-designed tax.

"If ever there was a time to seek a consensus it is now, as countries continue to deal with the aftermath of the crisis and the deficits it has created," he argued.

Liberal Democrat Stephen Williams believed a FTT could form a useful contribution to world development if is is introduced across all the global financial centres.

But Conservative MP Jacob Rees-Mogg branded a financial transaction tax a "rotten idea" which would "destroy half a million jobs across Europe".

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