Sometimes it makes you weep just how stupid the people who trouser billions in bonuses really are, despite their self-styled “Masters of the Universe” image.
On the day that the European Commission begins the negotiating process to introduce an 11-country financial transactions tax, the Financial Times reports (£) that US financial interests are shocked, shocked to discover a new and dastardly anti-capitalist, anti-globalisation plot at the heart of the measure. Currently known as ‘the issuance principle’, it means that the tax will fall on any financial instrument registered in the 11 countries concerned, regardless of where it is traded, and by whom. It’s been included in the EU proposal after Robin Hood Tax campaigners pointed out how much it would reduce tax evasion.
And it’s been part of the UK Stamp Duty on share transactions since … ooh… we reckon some time in the late 17th century, when the tax was introduced. Not so new, then.
But it strikes “a coalition of US business groups – including the US Chamber of Commerce and The Financial Services Forum, the body for the largest US financial groups” as based on “novel and unilateral theories of tax jurisdiction”, and, as well as being “novel,” they are “unprecedented” (you can tell these complaints have been drafted by someone paid by the word!)
The issuance principle contained in UK Stamp Duty does indeed mean that you have to pay the tax if you trade a UK share whether you trade it on the London Stock Exchange or one in the far east, and regardless of the nationality of the buyer or seller. It’s a principle that didn’t disturb the last Prime Minister to preside over the tax’s revision in the 1980s (that would be the famous red agitator Margaret Thatcher…)
The US groups are annoyed that the pesky Europeans are actually using the very tools of globalisation against the finance sector’s globe-trotting attempts to find lower and lower tax jurisdictions where they can make a mint (there’s even a term for this behaviour, ‘tax arbitrage’). So, there’s an easy way to make sure that the EU transactions tax doesn’t interfere in every day fortune-making around the world. Adopt it everywhere. Today Europe. Tomorrow New York.