The conclusions of the European Council meeting on Friday (25 March) showed that the Governments of Europe are still locked into the economics of austerity: the plan is still to make ordinary people pay for the crisis, rather than the banks. But there is a real struggle taking place over one issue, which is the Financial Transactions Tax (FTT). Initial plans to carry the Eurozone decision to move forward with an FTT were watered down in the final communique, but yet another European leader came out in favour of an FTT. Jean-Claude Juncker, Prime Minister of Luxemburg for the last 16 years, represents a small country but one which – not least due to the preponderance of banking in its economy – has a disproportionate influence on European economic policy.
Juncker, a leading figure in the European moderate conservative bloc the EPP (the ones the British Conservatives have left), told the German centre-right newspaper Die Welt that he shared the feeling in Europe that the financial sector was not adequately taxed, and that he therefore supported an FTT. He therefore added Luxemburg to the ranks of FTT supporters – including Austria, France, Germany, Greece and Spain.
However, initial drafts of the European Council conclusions on this issue were watered down. The final text (paragraph 15) had references to a global deal inserted, as well as waiting for the Commission’s impact report:
As agreed by the European Council in June 2010, the introduction of a global financial transaction tax should be explored and developed further. The European Council notes the intention of the Commission to make a report on taxation of the financial sector by autumn 2011 at the latest.
In some ways this merely restates existing EU policy (although the impact report was originally scheduled for the summer), but it suggests that the Eurozone leaders who had endorsed a faster move towards an FTT earlier in the month (11 March) met with a strong push back from other governments, presumably from among the 8 non-Eurozone countries. The UK must be a prime suspect, although the Swedish Government is also known to be hostile, largely because of the experienec of a poorly implemented FTT in the 1990s.
So the struggle continues, with Robin Hood Tax campaigners putting their efforts over the next month into the European Commission consultation on finance sector taxation.