Osborne lawyers up against Robin Hood Tax
The Chancellor George Osborne has announced that the Government will challenge the extra-territoriality of the EU’s proposal for a financial transactions tax (FTT, or Robin Hood Tax) in a probably futile move that is either foolhardy or hypocritical.
This isn’t about defending British interests against Europe – it’s about defending one rather rich square mile against the wishes of people in Britain and across Europe. Not content with letting our banks off scot-free, Osborne now wants to prevent European countries from making their financial sectors pay to repair the damage caused by the crisis.
Resorting to lawyers is the last refuge of a chancellor who has lost the argument. Not only is this morally wrong, it is breathtakingly hypocritical – the UK’s own £3bn stamp duty on shares is collected wherever UK shares are traded and regardless of who is trading them.
What Osborne is challenging isn’t the actual FTT proposed by the European Commission and being implemented by 11 EU member states. It’s the fact that the tax will cover all transactions which involve financial institutions operating in the countries which implement the tax, or financial instruments registered in those countries. That latter aspect is exactly the way that the Stamp Duty on shares operates in the UK: if you trade in a share issued by a company registered in the UK, wherever you trade it, and whether the buyer or seller is British or not, the tax falls due.
George Osborne’s challenge – which the European Commission anticipated, and considers likely to fail – would either blow a hole in the design of the UK Stamp Duty, risking the £3bn income that the Exchequer receives annually, or there may be some reason why the principle underpinning the EU tax could fall without the UK principle being affected, in which case it is staggering hypocrisy to say the UK can do it but the EU can’t!
But eventually we’re back exactly where we were 20 years ago when the then Major Government unsuccessfully challenged the Working Time Directive. Having lost the argument, George Osborne is planning to use the courts to prevent 11 member states from carrying out the democratic wishes of their electorates, and he’s insisting, effectively, that those 11 countries cannot insist that people trading in their financial instruments should be taxed. Finally – just as with the Working Time Directive – this isn’t a defence of the British people, who like those on the continent have consistently backed the tax in opinion polls, it’s in the interests of a tiny minority, the bankers of the City of London.
George Osborne is running out of allies: the rating agencies have turned on him, the IMF has urged him to change course, and now he’s taking on the rest of Europe.