From the TUC

Robin Hood Tax: Commission backs European FTT and small firms begin to come round

23 Jun 2011, by in International

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.

One Response to Robin Hood Tax: Commission backs European FTT and small firms begin to come round

  1. d4
    Jun 23rd 2011, 4:49 pm

    “FTT would provide additional financial means without putting burden on real economy.”

    Are you joking? How about the fact that retail banks/mortgage lenders have to borrow money from the interbank market over night to fill the books? Thats a financial transaction and that’s going to add up to around roughly 1.75% a year on-top of every bodies mortgage – how about a tax as low as 0.001% will make it near impossible for every trader i know to function within the eu? 0.5% is laughable…£1000 tax for a forex contract and the dealer has to pay to so he widens his spread, all those evil speculators have gone away now so there”s no liquidity in the markets…you know those people who are always there on the other side of the deal no matter what making the market function? Yep there gone and we now have a 15-20 ( each point being worth $10 ) spread on the currency exchanges that every one has to pay.

    Without liquidity in the markets volatility is significantly increased, no one is going to short a falling market covering there positions at the bottom creating buying pressure and stabilize the market in the process, no one there to absorb selling pressure every move of the market becomes an insane over reaction.( take a look at low volume stocks note what happens when the volume increases)

    Speculators serve a vital purpose and they will continue to and that”s the real cost to the economy as they leave to find another..its a global economy you cant just say to someone with a £100.000 account that if they turn it over twice daily for a year there in for 50-100 thousand tax Before profit or loss,Despite profit or loss and then additional taxes on any unlikely gains. You can not tax the notional value of a trade tax the “profits”.

    1 in 4 hedge fund traders has left London in the last few years because of increasing government regulation, the only reason stamp duty works in the uk is because its applied to retail traders only, no fund and no trader will be able to function with this tax hence they will move there accounts out side of the eu where there is no such tax and never will be, pretty similar to what happened in Sweden when they introduced such a tax at the end of the 80″s…bond and futures trading volume fell 90+% in the first week, options trading completely died off but hey stocks remained and they eventually received 3 hole % of the billions they estimated the tax would make as well as losing money they should have actually had from capital gains.

    The banks will stay because they have nothing to lose, its the public’s money they operate with and the huge costs will be handed to them..trading and investment firms will leave…today a bank phoned London to transact a 500 million currency deal and when this tax appears they will phone NewYork instead…its really that simple,the uk will lose hundreds of billions..but the eu, that little organization thats destroyed several country’s by not understanding year 10 economics and applying a single currency to country’s of different economic strength,,well they would do just about anything for money right now because without it there in serious trouble….lets take on more of there economic advances eh?