Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

I always consult widely, and when foreign direct investment is concerned the starting point is the IDA. We also consult other Departments that would have an interest. The Clearing House Group would, of course, advise. I also have my own views and I know how it works between Dublin and London. I know the common labour market causes the migration of the essential ingredient of financial services, which is the experts who work in the industry. There is no doubt at all that a financial transaction tax of magnitude, which applied in Dublin but not in London, would cause a loss in Dublin. That is self-evident. One does not need to consult very widely to know that.

I have a note that might be of benefit to the Deputy to outline the other difficulties of financial transaction tax. The ex-territorial impact of the tax could be a problem, as could the cascade effect, whereby one transaction can result in multiple charges. Further potential problems include the costs incurred by member states not participating in a financial transaction tax in the administration of the FTT, and the possibility of relocation of activities to non-participating member states, which I have mentioned already in respect of the Dublin-London situation. It might affect transactions in Government bonds, especially in the secondary market or repo market.

Our concerns are widely shared among other member states. We already have a stamp duty that is the equivalent of a financial transaction tax. It should be remembered that there are 28 countries in the European Union, and only ten of them are currently contemplating an FTT. They have been doing so for two years and I think they are as far away from agreement now as they were when they started because of the difficulties and the lack of common agreement on how it would affect individual countries. It would be an idea that one could go with if it were done globally through the G20. It might be acceptable if it were done right across the EU, but if it is done by a small group of countries to the detriment of others, then it is not a good idea and I am not going to participate.