The Robin Hood Tax is becoming the subject of much more heated debate: a sure sign that it is getting much closer to actual implementation. The UK Government has ramped up the anti-Robin rhetoric, with the German Government fighting back. The UK Government position confuses British interests with those of the City of London (along the lines of the US aphorism that “what’s good for General Motors is good for the US”).
Some of the hyperbolic language was so similar that it was pretty clearly orchestrated: the Chancellor described the EU financial transactions tax proposal as a “bullet into the heart of London”, and even former PM John Major was wheeled out to go even further and describe it as a “heat-seeking missile”. Some wags did of course point out that if it was a Robin Hood Tax, the most it could be described as was as an ‘arrow’.
A lot of the Government’s rhetoric simply conflates the interests of the City of London – where rich financiers and their rich clients will undoubtedly end up paying much more tax under the proposals – with London or Britain as a whole. As the Guardian’s Seamus Milne pointed out:
“the City isn’t a national interest. It’s a class interest and a sectional interest that has the political elite and the regulators in its pocket – and has brought the economy to its knees. The interest of most people in Britain by contrast is in a financial sector focused on domestic lending and investment for recovery and sustainable growth.”
“Banks and people won’t relocate. London will not disappear and thanks to geography and time zones, will remain at the centre of the global financial world.”
Meanwhile German Finance Minister Wolfgang Schauble responded by arguing that if all other transactions were taxed under VAT rules, it didn’t make sense to exempt financial transactions. Others claimed that the British Government was unwilling to help sort out the Eurozone crisis. Volker Kauder, leader of the Christian Democrat parliamentary party, went on to tell the party’s congress:
“I can understand that the British don’t want that when they generate almost 30% of their gross domestic product from financial-market business in the City of London [actually the City accounts for less than 10%]. But Britain also carries responsibility for making Europe a success. Only being after their own benefit and refusing to contribute is not the message we’re letting the British get away with.”
The Government ended the week emphasising its support for a global tax (although that would have exactly the same impact on the finances of the City), not least to allow for a slightly less fractious meeting between David Cameron and Angela Merkel, where they could agree on support for a global tax, while agreeing to differ on a European one.