European Commission: unambitious on Robin Hood Tax
The European Commission has produced a new Communication on Financial Transaction Taxes, which says that the EC supports a global FTT, but at European level prefers a Financial Activities Tax (FAT), which is similar to the IMF position. An FAT would raise just €25bn a year across Europe, as opposed to an FTT which could raise hundreds of billions. So it’s unsatisfactory, and the ETUC have slammed it also because it’s a way of passing the buck by refusing to have an FTT until every other country has one. However, it is a step forward, as it is more positive about FTTs than the Commission has been in the past – the only remaining objection to an EU or country-by-country tax as far as the Commission is concerned is that FTTs might lead people to leave Europe for other financial destinations (the counter argument is that 16 out of the 20 countries in the G20 already have some form of FTT, and that doesn’t seem to have led to a huge increase in global migration). The key point to keep making, I think, is that the Commission is being far less ambitious about taxing the financial sector than about cutting public services, where they are alarmingly gung ho!
The detail of the Commission paper agreed today – which will be put before EU Finance Ministers next week, as a pre-cursor to discussions at the next EU summit – says that FTTs are feasible, distributive (although it’s a bit grudging on that!) and would raise shed loads of money – indeed they suggest that a 0.1% tax on share transactions would itself raise €60 billion a year globally, which means that a 0.5% tax rate (which is what the UK levies in stamp duty) could raise €300 billion all on its own!
But, rejecting an FTT unless adopted globally is essentially a way of passing the buck to other G20 countries – such as Canada and the USA – who are known to oppose the idea. That partly explains the ETUC’s hostile response. Some others are suggesting a more positive spin, welcoming the FAT and hoping to increase the sum it generates so that there is more money available. Unions are less willing to throw in the towel yet – and there is a huge gap between the resources the FAT and FTT would raise.
The TUC position was set out by Brendan Barber who said:
‘The Commission has responded to public pressure. This is a much more positive approach to financial transaction taxes (FTTs) than we have seen in the past. But European Commission support for a global FTT should not let the EU and member states off the hook of implementing their own transaction taxes. IMF research shows that not only is this perfectly feasible but that 16 G20 countries already have some form of FTT. European governments like France, Germany and Spain – and of course the UK – should over-rule the over-cautious Brussels bureaucrats.’