Desperate to paint himself in French revolutionary colours ahead of elections he is currently predicted to lose to the Socialist candidate Francois Hollande, current President Nicolas Sarkozy has unveiled a unilateral French Robin Hood Tax which he proposes to table as part in Parliament as part of the Budget debate next week. Campaigners have pronounced themselves less than impressed, as the measure being proposed is a fairly pale copy of the UK stamp duty, and is likely to raise only €1bn a year, certainly far less than the financial transactions tax the European Commission is proposing. And they are also unimpressed by his plan to use the revenue raised to cut the French government deficit rather than use any of it to boost France’s lamentable spending on international development or combating climate change. About the only positive thing about the Sarko-tax is that it could be in place by the end of the year.
But it really is one very small step forwards, and seems to have the paw prints of a very cautious Finance Ministry all over it (although even so, the French finance industry is apparently appalled.) Here are the details that we understand so far (hat tip to Robin du Bois campaigners Khalil Elouardighi and Nicolas Mombrial):
- the tax is being spun as a precursor to a supposedly upcoming sub-EU Enhanced Cooperation Agreement on FTT later in 2012;
- the tax rate will be 0.1% (instead of UK 0.5%);
- the tax base will be transactions in shares of French companies with collection solely via Euroclear-France (ie excluding collection via LCH-Clearnet, Euronext, or foreign market infrastructures that yet process French instruments);
- it may be a tax on net transactions (whereas Stamp Duty is a tax on gross transactions);
- they’re contemplating exempting share transactions for market-making and own-account, just like UK already does (the TUC has called for this loophole in Stamp Duty to be closed, thus doubling the current £3bn revenue raised); and
- they’ve decided to exempt transactions in corporate bonds, sovereign bonds, foreign exchange, and all derivatives except options on French shares.
Sarkozy’s opponent Francois Hollande has been establishing his position as a more forthright critic of the banks and more committed to tax the rich, and this seems to confirm his portrayal of Sarkozy as soft on the people French citizens think caused the crisis and should pay for it. Linking the new tax to reforms of the French labour market to lengthen the working week hasn’t helped either!