Mr. Seamus Coffey:

From an economic perspective an FTT is sound. The purpose of the financial sector and finance in general is to allocate money from savers to borrowers and to allow us, to a certain extent, to engage in risk management. The problem is the financial sector has become much larger than that, part of which has been down to the ease of transactions that can now simply happen at a touch of a keyboard. Transactions that would previously have been quite complex can now be done in fractions of seconds. The financial sector in general is adding value as it circulates funds around and deals with risk, but the part of the financial sector that engages in this very high-volume transacting might not necessarily be. These small taxes can to a certain extent control that and also get a contribution from the financial sector to the broader economy. Much of what happens in the financial sector stays within the financial sector - they are dealing with each other rather than dealing with individuals and businesses which is where the real benefit of the sector comes from.

The concept of the FTT has been around for 40 or 50 years without being implemented. The difficulties that Mr. McDonnell highlighted of countries picking and choosing what they want reflects the difficulties in implementing it. From an Irish perspective, it is not so much the imposition the FTT would put on normal people - we do not engage in huge amounts of transactions with bonds, shares and derivatives - but that within Ireland a lot of it happens through the financial services sector that provides 20,000 or 25,000 jobs. We talk about the IFSC, but basically it is a financial services industry within Ireland. There are IFSC-type companies in Cork - they might not be in Dublin 1 but throughout the country companies are engaged in activities relating to that sector.

As has been highlighted it becomes very much a national issue as opposed to a broader issue. The benefits of such a tax have readily been proved and stand up, but then economic nationalism steps in and countries decide to step out. So Ireland has decided to step out on the basis that we do not want to be seen to be flexible in any fashion. We have established, what we might call, a business-friendly environment and even with issues such as corporation tax and financial transactions tax, we have drawn a line in the sand and said we would not change. It is not that these changes are negative but that we do not want to show any flexibility and want to provide certainty for foreign companies investing in Ireland, which looks locally rather than to the broader issues. It is possible to justify the decision to stay out of the FTT. I believe the economics of it stacks up and it would be a useful addition, but getting all the countries to come into it would be quite difficult.