Tax exile
I would not like to argue that one motive for the euro was to cut the City down to size, but putting it on the spot would be the next best thing. Big business's generals, though not the City's front-line comman- ders, could not bear to be left out of Europe's exchange rate mechanism, which we duly joined on the wrong terms at the wrong moment. We could repeat that mis- take with the euro on a larger scale. The next plan for cutting the City down to size is a withholding tax. This would tax divi- dends at source and at 20 per cent, and is being pushed by the Germans, who are vexed to see their fellow-citizens avoiding tax by moving their affairs to friendly Lux- embourg. Predictably, Britain and Luxem- bourg are now in a minority of two in this argument. Just such a tax in New York first drove the markets offshore, and could as easily drive them out of London to a more receptive offshore home: Hong Kong, for example. You might trustingly think that a financial centre like this was an asset for Europe, but if any of our European part- ners think so, they keep quiet.
Previous page
