Robin Hood Tax: Commission backs European FTT and small firms begin to come round
A momentous week for the Robin Hood Tax has included the third Global Day of Action and movement at last from the European Commission. After months of delay and originally a firm rejection of financial transaction taxes, certainly at EU or Eurozone level, it now looks likely that the Commission impact assessment (due to be published in the next fortnight) will say that a Europe-level FTT is feasible – and even more concretely, the President of the European Commissioner and the Tax Commissioner are lining up at last to promise action on an EU level FTT in the autumn.
And it isn’t just politicians, economists and campaigners who are now on board. European small firm and craft enterprises body UEAPME has suggested it could support FTTs too, although it has yet to come out formally in favour.
The UEAPME view, revealed at the launch of a major WIFO report on the feasibility of FTTs by long-time supporter Stefan Schulmeister, is particularly welcome. Small firms representative Gerhard Huemer said that UEAPME’s general position on financial market regulation implied support a FTT. The arguments in favour of FTT from an SME point of view are:
- financial market regulations have to make sure that financial markets serve real economy and not support speculation and financial engineering.
- FTT would provide incentive to invest in assets rather than in sophisticated products with a high trading turnover.
- FTT would provide additional financial means without putting burden on real economy.
But the position of the European Commission is no longer a matter for speculation, although they evolved as the week progressed.
In his pre-European Council press conference, President Barroso said:
“To respond to the economic crisis, every sector needs to contribute, none more so than the financial sector. Yesterday, I announced in my letter to my colleagues in the European Council that the Commission will present a formal legislative proposal, after the summer, to put in place a financial tax within the European Union.”
Campaigners were pleased that he was no longer dismissing a European level financial transactions tax, but noted that his precise wording could still leave the Commission proposing a much smaller Financial Activities Tax for Europe, while still supporting (as the Commission has for some time now) an FTT at the G20 in November.
But Algirdas Semeta, EU tax commissioner and a noted opponent of a European level FTT as recently as March when the European Parliament called for one, said his department’s analysis had shown that the different options for taxing the financial sector had separate merits. But he said:
“I believe as a first step there are ways to implement a financial transaction tax in the EU while mitigating the main risks identified”
And the FT Europe (£) edition reported that he would be recommending this to other Commissioners (strangely, but as so many times over the past year, this report failed to appear in the UK edition of the FT!)
Barroso then made clear that his rearks envisaged a European level financial transactions tax too.