Robin Du Bois? French Ministers advance plans for new tax
This week, the French government has ratcheted up the pressure for a Robin Hood Tax, either at a sub-EU level or, it now seems, unilaterally. French and German Ministers plan to table new proposals later this month for an FTT covering willing EU member states (given the UK’s opposition to an EU-wide tax which would require unanimity) to take effect earlier than the European Commission proposed last autumn.
And it now seems that Sarkozy’s government is willing to go ahead unilaterally anyway, and earlier still. Francois Fillon – the Finance Minister – this morning indicated that a French tax could take effect by the end of the year, apparently reversing the position the French centre-right took in Parliament before Christmas in response to a call from the left-dominated Senate for a unilateral FTT.
This is no doubt all part of pre-Presidential election campaigning, but it’s a significant step forward, and taken together with German budgetary projections which already foresee such a tax in Germany (where most politicians also seem committed to a unilateral tax regardless of whether the tax is agreed more multilaterally), means that progress will be swift, especially given the switch by the new technocratic regime in Italy, who now strongly support a European FTT.
Where does that leave Britain and Cameron’s so-called veto?
Well first, it exposes the little-Englander rhetoric that described the EU FTT plans, before Christmas, as a ‘heat-seeking missile’ aimed at the City of London. Whilst the City is certainly the biggest venue for financial transactions in Europe, Germany and France have the second and third biggest exchanges respectively. So a Franco-German FTT would impact primarily their own finance sectors, not the UK’s. Sarkozy and Merkel are simply less beholden to their respective financial elites than the UK Conservative Party, who aren’t defending the UK economy or it’s finance sector so much as their friends in the City.
There is a more sophisticated concern, aired by peers when the TUC gave evidence to a Lords committee on the draft EU directive for an FTT before Christmas. Some peers were (more rationally) worried about how much of the tax would flow from the UK to Europe even if the UK didn’t take part, because transactions in London involving traders from countries where the tax was in force (eg a Deutsche Bank trader, even if based in London) would be taxed in Germany.
But there is a simple answer to this. If the Treasury doesn’t want a European FTT to lead to a net flow of tax revenue from the UK to other parts of Europe, they need to join in, so that all the tax receipts raised in London stay with the Exchequer, just as Stamp Duty receipts do now, wherever in the world shares in UK companies are traded.