British Leaders Object To EU's Proposed Tax

Plans by European politicians to introduce a tax on financial transactions are getting a cold reception in Europe's main financial center, London. On Wednesday the head of the EU executive branch said banks and other financial institutions should contribute to fixing Europe's economic problems ... but 80 percent of any income would come from London, and many British leaders reject the idea.

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GREENE: The head of the European Commission has renewed calls for a tax on financial transactions. He said yesterday it was time for banks to step up and contribute to solving Europe's debt crisis. But Europe's financial center lies in London, and as Vicki Barker reports, the British government is likely to veto such a plan.

VICKI BARKER: If adopted, a tax of one-tenth of one percent would be levied on all transactions between financial institutions where at least one entity was based in the European Union. EC President, Jose Manuel Barroso, has said the tax could raise about $75 billion a year. Bank stocks across Europe fell after Barroso's speech.

Claude Moraes is a European lawmaker from Britain's left-leaning Labour Party. He says Barroso is expressing the will of the European people.

CLAUDE MORAES: It's a step in the right direction. Because people don't feel the banks have paid for this crisis. The bonuses are still being paid, the banks are still doing well. This is not good enough.

BARKER: Most of Europe's banking transactions move through London. City officials claim they'd end up paying about 80 percent of all the revenues raised by the tax. Britain's Conservative Prime Minister David Cameron has said he'd only support the measure if it was enacted globally. Since the U.S. has firmly rejected similar proposals, that's highly unlikely.

Katinka Barysch is with the London-based think tank, the Centre for European Reform. She says British opposition leaves supporters, like Germany and France, with limited options.

KATINKA BARYSCH: The only way you could get this through the EU machinery is if you restricted it to the eurozone countries, i.e., only those countries that are in the euro - but not Britain, for example.

BARKER: In fact, Barroso has suggested that as an alternative, but several analysts have already pointed out that imposing the tax only in eurozone countries would likely just prompt banks and investment houses across mainland Europe to up stakes and move to the UK. For NPR News, I'm Vicki Barker in London.

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