New 0.05% tax on banks...

Because it's a "transaction" tax. It has to be low enough not to be noticed.

It means that if you buy 100 pounds of shares you pay 5p in tax.

If it were 25% you'd pay 25 pounds, so you wouldn't invest and the tax collected would be nil.

It has an effect here because this type of "investment" works on margin. That means the percentage return is very small for the amount invested.

The banks will argue that this tax will kill such margin investing, but given what has recently happened, the authorities should respond "good riddance".

You would be affected in the sense that you would have to pay it, but not in the sense you wouldn't notice it

tim

"tim...." wrote

But according to the proponents on the telly (and their website), it would have *no* effect on people anyway, so even 25% "wouldn't be noticed"...

"tim...." wrote

But members of the public won't be subject to the tax, and it won't affect the profits of banks either (according to the people on the telly). Not even a small amount.

So - just multiply "not at all, not even a small amount" by 500 (say), and you still have "not at all, not even 500 x a small amount".

According to the proponents of the tax, it *won't* affect the profits of the banks. If it did, then it would affect (eg) pension funds (which invest in bank shares) - which they categorically say it will *not* affect (see the snippet from their website which I quoted previously).

"tim...." wrote

In that case, either the margin investing didn't produce any profits overall (in which case it wouldn't be missed) -OR- the proponents of the tax are wrong when they say it won't affect the banks profits.

"tim...." wrote

You & I might think that, but the guy on the telly & their website doesn't!!

"tim...." wrote

It seems to me that even if you spread 250billion over the entire global population, everyone would be contributing on average around 40 each year - wouldn't you notice that?

I agree, it probably would affect Bank's profits, but I don't see that as a bad thing.

I didn't make the film, I don't agree with all of its claims. Just explaining the process.

tim

In article , tim.... writes

Anyone who says it won't affect people have little understanding of corporate taxes.

Bank A does some international transactions for Supermarket B, and increases the cost of the transaction marginally to account for the transaction tax.

Supermarket B, when it comes time to adjust the price of a tin of beans, puts them up by the anticipated 5p plus another extra 1p to offset the transaction tax and maintain their profits.

Very simplistic example of how corporate tax increases get passed down the chain until they arrive at the consumers who eventually pay. Corporate tax reductions of course go straight to the shareholders!

Hmmm...

Gordon Brown's tax on dividends...

- Nominal 20% on 3% annually

- Effectively 0.6% per year against annual return

- Incurred for however many years the shares are held

Gordon Brown's tax on scalping trades...

- Nominal 0.05% on value of the trade

- Incurred every time a Buy or Sell order occurs

- Assuming 100 scalps per year that is 5% per year

So it is going to hit any transactions that occur regularly. For financial trading it forces higher leverage or different trading patterns. For corporations it just adds to the inflation cost chain. Probably hits things like FTSE-spread-betting or such like.

The alternative is it forces trading offshore, financial empires eventually follow the money to new pastures.

The theory for this tax is, if implemented, there will be no offshore to go to

tim

That will not go down too well :-)

So if China (say) does not play ball who is tasked to send a gunboat?

Or is this another of G Brown's laws with no enforcement (and hence low compliance)?

Exactly. I assume this nonsense is for naive domestic political consumption only. The idea that the whole of the rest of the world is going to go along with this is quite ridiculous.

Chris