Today, European finance ministers (ECOFIN) took what EU Tax Commissioner Algirdas Semeta called a “historic decision” to allow 11 or more Eurozone countries to negotiate a common tax regime for financial transactions under what’s known as the Enhanced Co-operaton Procedure. Apart from the fact that he announced it on Twitter (itself probably a world first!), the historic element is that this represents (I think – would love to hear of others) the first tax on corporate activity that will be introduced across national borders. The EU has rules on VAT, but that’s more about co-ordination, and of course doesn’t tax corporates as directly as the Robin Hood Tax will.
This could be the template for how to deal with the likes of Amazon, Google and Starbucks who have made billions by what is known as tax arbitrage – basically, choosing which country’s tax regime you’ll follow on the basis of who charges the least! It’s the way nation states need to adapt to globalisation and the free movement of capital while still retaining the freedom to manage their own tax affairs and therefore the income they need to fund public services. (Capital isn’t the only thing governments can tax, of course, but it’s the least taxed at the moment apart from land, and it’s the only bit of the world economy growing strongly any more!)
“We’re delighted that in Europe at least, the public interest has trumped the profit of a privileged few. This historic decision is proof that making banks pay for the damage they caused is not rocket science, but a matter of fair play and political will. The contrast could not be starker with the UK – how can the Government justify turning down billions in revenue to protect the super rich in the City, choosing instead to cut services for the poorest?”