Robin Hood in Parliament: the votes themselves are not what’s interesting
Last Tuesday saw votes in two Parliaments on the subject of the Robin Hood Tax. In the European Parliament, the influential Economic and Monetary Committee voted to support the tax being introduced by the 11 EU member states. But the House of Commons voted against an Opposition amendment calling for support for the principle of the tax, with Liberal Democrats opposing yet another policy set out in their 2010 General Election manifesto.
Both votes, though, represented a step forward for the campaign, which has come in for a sustained hammering from the finance sector over the last few weeks. The votes themselves – neither of which would determine any change in practice – where not the most interesting element.
The European Parliament Committee has no power over the EU financial transactions tax (FTT), but could be influential. Greek Socialist MEP Anni Podimata, who has become the Parliament’s rapporteur of choice on FTT developments, had produced a draft report on the current proposal whose implementation is being negotiated by 11 EU member states. There were a number of amendments suggested to water down the proposal, such as exempting pension funds, but in the end the Committee voted by a 2:1 majority to retain the wide scope of the tax. The wider the scope, the less opportunity for arbitrage, and the more efficient collection of the tax can be.
They did, however, recommend that pension fund transactions should be taxed at a lower rate than other financial actors for an initial period. I wouldn’t be at all against this – the TUC has always argued that it’s sensible to start the tax small and only raise it after we’ve seen the effects – although at this stage in the negotiations, it would be sensible to indicate an automatic increase after a couple of years, so that no one gets the idea absolute exemption might be on the agenda.
But the significance of the EP Committee vote (there’s still a plenary vote to come next month) is that MEPs refused to be cowed by finance sector lobbying, and backed the EU 11 rather than George Osborne’s vain attempt at blocking the move in the courts. Anni Podimata concluded after the meeting:
“Despite intense lobbying from the financial sector, we managed to defend an ambitious proposal covering all financial institutions, all financial products and all financial markets.”
In the House of Commons, Labour’s Shadow Chief Secretary to the Treasury, Chris Leslie, proposed that the Commons vote for the principle of the FTT. It was a move widely interpreted as part of the ‘wedge’ operation where Labour intermittently attempts to split the Liberal Democrats off from the coalition. Most of those deploying that interpretation were Liberal Democrats, because it made it easier to dismiss the move as party political game-playing and therefore excuse voting against the amendment, rather than seeing it as a genuine attempt to demonstrate a Parliamentary consensus over an issue which was, after all, a Liberal Democrat 2010 Manifesto commitment. In the end, Labour and the Green MP Caroline Lucas voted in favour, Conservatives and Lib Dems (though not be any means all of them) voted against. [UPDATED: Apologies to other parties: my quick skim of the voting list suggested it was a 4-party monopoly, but see comments below.]
However, there were other motives at play too. First, this was the furthest Labour have officially gone in supporting the tax formally, albeit only ‘in principle’ and still conditional on US movement on the issue – as set out in Chris Leslie’s Guardian blog earlier in the year after he visited Washington DC. The National Policy Forum this weekend has seen further pressure from unions and party activists on the Shadow Chancellor to back the Robin Hood Tax outright. In the 24 hours before the vote, the Robin Hood Tax campaign was able to mobilise over 3,000 supporters to email their MPs.
But second, this was also the week when Westminster was abuzz with questions about how far Labour would promise to stick to the current Government’s spending pledges (as Labour promised in the run up to 1997 and – although they actually broke their pledge – the Conservatives did in the run up to 2010: this is now a well-worn political rite of passage). Backing the Robin Hood Tax suggests an alternative course to the current policy of austerity through cuts, and would allow a future Labour government to minimise those cuts while still heading towards a balanced budget. With the Comprehensive Spending Review looming this Wednesday, you can expect to see more debate about whether the Government’s failure to make much progress on that should be tackled by deeper cuts or more taxes.