Tory MEPs attack on Robin Hood Tax: why the finance sector HASN’T done enough
After last week’s momentous European Parliament vote in favour of a European Robin Hood Tax, backed up days later by the 17 countries which use the Euro as their currency, Conservative MEP Roger Helmer attacked the Robin Hood Tax (a campaign he described as “presentational genius” – many thanks!) using the standard arguments that it would lead to the banks leaving the UK and to you and me paying the tax because the banks would pass it on but also, in an outburst of Euro-scepticism, because it would be seized by the European Commission to further bloat the Brussels bureacracy. He’s wrong on both counts, of course.
But it’s important to address criticisms even when they come from people so far out in the political wilderness as Conservative MEPs (I’m not being sectarian – their departure from the mainstream conservative EPP of Angela Merkel and Nicholas Sarkozy in favour of a tiny right-wing groupuscle, and their departure from rational thought over issues such as climate change, really do justify the charge). Here are the quick answers to his criticisms (they are, necessarily, in shorthand).
Would a Robin Hood Tax lead to the banks leaving Britain? The Financial Times thinks not, not least because the £20 bn they would pay would be far less than the £100 bn that the finance sector is currently subsidised by the Exchequer, but also because “leaving Britain” is only an option for parts of the banks anyway – large chunks of the retail arms would have to stay, and much of the trading that they do which would attract the tax (eg the Stamp Duty on share transactions) would still attract the tax whether they were based in the UK or not.
Would a Robin Hood Tax be passed on to consumers? Apart from the internal contradiction between this criticism and the one I’ve just dealt with (if they can pass it straight on to customers, why would it persuade banks to move their headquarters?), it is true (as the TUC has always admitted) that some of the costs of a Robin Hood Tax would fall on ordinary consumers – although the main costs in many countries would be from taxes on share dealings, and the UK Stamp Duty already taxes them. The main costs of a Robin Hood Tax in the UK would fall on hedge funds and the like, and even if they were passed on to consumers (which competition between the finance sector’s maain players might make unlikely), they would be being passed on to very extraordinary consumers indeed – ie the very rich. On currency transactions, you could either exempt the sort that you or I engage in for our summer holidays, assume that currency changers who already take about 6% of each transaction in charges might actually swallow the 0.005% tax we’re proposing rather than increase charges to 6.005%. But even if it was passed on, for every €1,000 you change, you’d pay an extra 5 cents.
Would a European or Eurozone Robin Hood Tax go directly to the EU? This is where Roger gets really weird. It’s not impossible, is the answer, but to be likely, you’d have to overcome two rather large obstacles. First, the tax would almost certainly only be possible to collect at a national level, so Member States would have to voluntarily give up the money to the Commission, and secondly, the decision about how the tax would be raised and spent could only be taken by national governments. So for Roger’s fears to be well-founded, national governments around Europe would have to volunteer to give the Commission the money. And if they would be willing to do that anyway, then they would surely be almost as willing to give up parts of their Income Tax, their VAT, their corporation tax, etc etc. Like many of the arguments that opponents of the Robin Hood Tax raise, this is an argument against ANY taxation. Which may of course be why people like Roger Helmer are agaainst it: they just don’t like taxes full stop.