Government quizzed over tax

The Government is turning down the opportunity to raise an extra €700m a year from trading financial services on the advice of the banking and hedge fund industry, according to information from the Department of Finance.

Labour MEP Nessa Childers asked the Government to say what external groups they dealt with in relation to a Financial Transaction Tax proposal from the EU.

She received hundreds of pages of emails, letters and documents dealing with the issue as discussed between government departments and the industry.

It included a report from the international hedge fund lobby group, AIMA, advising against such a tax and warning that it would frighten off businesses from locating in Ireland.

Ms Childers said she believed the Government should contact a range of organisations and bodies representative of the citizens and not just those with a vested interest in avoiding a new tax.

But, she said, the information she unearthed with her question, pointed to the need for the Government to be much more transparent in who it meets and what advice they get, especially in relation to forming policy on issues that affect every citizen.

The documents reveal there is a permanent group called the IFSC Clearing House Group, which is co-ordinated directly through the Department of the Taoiseach, and involves many other departments also, including finance.

This group, which is facilitated by civil servants, has a number of sub-groups dealing with the hedge fund, insurance, banking and treasury sectors with monthly meetings.

“When this group is influencing policy that not only affects the financial services sector but also impacts on the lives of all sections of Irish society, there must also be far more balance in these meetings. This is especially needed when discussing EU policy, with balance provided with participation from other sectors, from SMEs and the social partners,” she said.

The group includes many financial firms such as JP Morgan, HSBC, State Street and lobbying organisations such as the Federation of International Banks in Ireland, the Irish Banking Federation, the international hedge fund lobby AIMA. Accountancy firms such as KPMG, PWC and Deloitte are also present, the documents show.

The European Commission has put forward proposals for a financial transaction tax that would tax stocks and bonds at a minimum rate of 0.1% and derivatives at 0.01% by 2014. Apart from raising substantial sums of money, including an estimated €700 million a year for Ireland alone, it is also designed to deter frequent, high speed trading that is completely automated and risky trading by hedge funds.

Economist and FTT expert Andreas Botsch of Finance Watch, said most of the arguments of the financial industry that pretend to be geared towards the economic and social interests of citizens are just focused on the interests of the industry.