In his
FAQ UPDATE, Peter is thinking of increasing his 1% financial transaction tax to maybe 5%. On his updated
5% FCUKTT, he's decided to go for it.
This seems to be on money that may not even (as far as I can tell) flow through the UK. There are international schemes that ensure for example that when a bank in Japan that is selling currency to a USA bank in exchange for USD, the two transactions occur at the same instant, so any failure doesn't cause problems. If Peter could tax these at just 1%, he would become insanely rich. He would earn more in a week than Bill Gates has in his entire lifetime.
I can see a couple of flaws. If he taxed just the transaction with a UK involvement, the money-movers would cease to involve the UK. If his tax was world-wide, the price of everything would increase by 1% to 5%. The price of grain, coal, steel, aluminium, cameras, pizzas, everything that was bought and sold involves money movement. If the cost of moving money increases, then so do prices.
I'm no economist, but is seems to me that taxing all money movements would also put a dampener on money movements. If someone makes a 2% profit on a transaction, then halving that profit (or making it negative) will make that person reluctant to do it at all. Suddenly we find that grain, coal, steel, aluminium, cameras and pizzas are no longer being moved about, bought and sold.
Currently, business are taxed on profits they make, rather than on all transactions. If they were taxed on all transactions, so we wouldn't need personal taxation, I'd think that they would merely pass that cost down to their customers, and it would eventually be paid for by people. So we wouldn't save people anything, overall. And if only one country did this, businesses would swiftly move away.
Fortunately for the UK or world economy, this tax is merely Peter's fantasy.