MEPs vote against finance sector lobbying, for a broad-based Robin Hood Tax
Finance sector lobbying against a Robin Hood Tax has reached fever pitch. As I blogged last month, opponents of the tax have adopted two central strategies: spreading rumours that the European financial transactions tax (FTT) negotiations are on the rocks, and crying crocodile tears over suggestions that the tax will fall on pensioners, governments and other deserving causes. In reality, the negotiations are proceeding normally, and the real reason the finance sector is opposed is because of the effect on their own pockets.
So today’s vote in the European Parliament on the issue was being closely watched by both sides. Greek Socialist MEP Anni Podimata had steered a report on the European FTT being implemented by 11 governments in the EU through the influential Economy and Monetary Affairs Committee, and today the whole Parliament was due to vote on the report. It’s just an opinion – the European Parliament has no say over the 11-country proposal. But the Parliament has been significant in the past in promoting the tax, and the Commission has been waiting for this vote before piling on the pressure to get the tax implemented (Tax Commissioner Semeta said after the vote: “with today’s democratic backing, Member States must now press ahead in reaching quick agreement”). And this is the first EP vote since the finance sector realised earlier this year that they couldn’t stop the tax coming in, and redoubled their efforts to shrink the tax to a minimum.
Enough scene-setting (more details below). MEPs voted by 522 to 141 (42 abstentions) for an unamended Podimata resolution supporting a broad-based FTT without exemptions. That’s a pretty thumping mandate for the 11 EU countries to go ahead and implement the tax. The UK Conservatives backed Chancellor George Osborne’s legal case against the tax, but ended up in a minority. If he truly believed in democracy, maybe George Osborne should abandon his case (which we understand is likely to be thrown out anyway.)
Both in the Economy and Monetary Affairs Committee, there were concerted attempts to exempt pension funds and Government bonds, in line with the finance sector’s lobbying. The Committee voted 2:1 for no exemptions – which is important not just because of the reduced revenue that would result from such exemptions, but because the more exemptions, the more difficult the tax is to administer. In the European Parliament, the Liberals, Conservatives and extreme right united with a small group of centre-right MEPs, but lost the amendment 458 to 225 (23 absentions) – a two to one ratio again.
While the Liberal group were the largest component backing that amendment, it’s worth noting that the centre-right EPP (including German Chancellor Merkel’s party, and former President Sarkozy) voted overwhelmingly against the amendment, ie against exemptions to the FTT. This is the group that David Cameron marched his own MEPs out of to join the fruit cakes and swivel-eyed loons that he is prepared to work with, as opposed to the UKIP members who also opposed the FTT outright.
However, the MEPs backing an FTT did indicate that they would be willing to compromise over the issue of pension funds. It’s only fair to say that some trade unionists are concerned about what impact an FTT would have – despite the formal views of the European and global trade union movements that these concerns can be addressed. MEPs indicated that one way of testing whether those concerns are justified would be to start off with a lower tax rate for transactions by pension funds, and the Commission is willing to explore that possibility, as long as it’s not a loophole in the overall tax.
The EP vote has been welcomed by the Socialists & Democrats, Greens and left-wing parties, as well as by the Commission. And, of course, by the Robin Hood Tax campaign, Oxfam and the TUC. Meanwhile, on Tuesday, the Irish Congress of Trade Unions agreed to press the Irish Government to join the group of 11 countries implementing the tax. As the Commission had to say last month in response to finance sector rumour-mongering, rumours of the death of the FTT are significantly wide of the mark: it’s in rude good health!