Transaction tax would be damaging, says Noonan

A financial transaction tax would damage Dublin to the advantage of London, according to Michael Noonan, the finance minister.

He said he had no problem with the proposed levy if it applied evenly across the EU, but not if it was res-tricted to the financial zone.

France is due to impose such a tax from August, president Nicolas Sarkozy has announced in a bid to try and regain ground in his April re-election bid.

Mr Noonan fears any attempt to enact such a move across the eurozone could hamper Dublin’s ability to compete with London in the lucrative financial services trade.

He said the Government would have no problem with the principle of a transaction tax if it included all the G20 major global economies.

“If it was applied worldwide it would be a reasonably good idea,” Mr Noonan told the Dáil.

“If it was applied to all 27 EU states we could live with that. But if it is applied to just 17 states, with a tax applying in Dublin that would not apply in London, we could not live with that.”

Mr Sarkozy hopes the proposed 0.1% transaction tax will prove popular if the revenue generated is then pumped into job creation schemes.

The EU has calculated that such a levy could raise €55bn a year.

The threat of such a levy was a key factor in British prime minister David Cameron refusing to sign up to the fiscal union pact agreed by 25 of the EU’s 27 states.