Financial Services Authority (FSA), the financial services regulator of UK, is backing the idea of global taxes on financial transactions as a tool to curb exorbitant compensation packages and bonuses in the industry – reported Telegraph.
It has been reported that the idea was put forward by anti-poverty campaigners, who explained that a little levy applied to each financial transaction would fetch billions of pounds that could be used to support developing nations.
Adair Turner, chairman of the FSA, said that derivatives, fixed-income securities, trading and hedging and to some extent asset management have grown beyond a socially reasonable size. He added that eventhough higher capital requirements remain a major tool to curb excessive activity and profits, a tax called ‘Tobin tax’ on financial transactions globally may be an additional option.
In a round-table discussion organised by Prospect magazine, he said: If you want to stop excessive pay in a swollen financial sector you have to reduce the size of that sector or apply special taxes to its pre-remuneration profit.
