We need a broad-based EU Robin Hood Tax and we need it now
Bernadette Segol, General Secretary of the European Trade Union Confederation (ETUC) spoke at a press conference in the European Parliament on 12 February 2014, launching a call by over 300 civil society groups to key European leaders for the European Financial Transactions Tax (FTT) to be implemented speedily and without loopholes. Here is an edited version of her remarks.
Unions across Europe – and around the world, such as our US and Brazilian colleagues – support a financial transactions tax. I’m proud of the role our French, German, Italian and Spanish colleagues have played in this campaign – even the British unions, with their Robin Hood Tax, although they have yet to persuade their government.
We support it for three reasons.
One, it would generate much needed revenue for public coffers strained by coping with the crisis. The ETUC wants to use some of it, for example, to prime the pump for our sustainable infrastructure investment strategy, our ‘New Path 4 Europe‘.
Two, it would spread the burden of taxation more fairly. The IMF itself says the finance sector is undertaxed. The impact of government pledges to save failing banks reduces their borrowing costs by well over €100 billion every year – an implicit subsidy from ordinary tax payers that banks should help pay for. And why should we all have to pay VAT except the speculators, who don’t have to pay it on financial transactions?
And third – and this is possibly the most fundamental change – a financial transactions tax, even at the tiny levels we are talking about, would change the rules of the game in the financial sector. It would make speculation and gambling on the money markets pay less, and make investment in the real economy more attractive. We could begin to tilt the playing field back to where the finance sector serves the real economy rather than the other way round.
That’s why a financial transactions tax is important, and why we need it urgently, before the European Parliament elections.
It is also why we need the broadest possible base for the tax. The more loopholes there are, the less effective it will be in controlling behaviour and the less revenue it will raise. That is why some people in the sector are pushing for those loopholes: legislators should beware of such naked self-interest, even when it is dressed up as concern for pensioners, or consumers, or companies.
In terms of some of the criticisms made of the tax, I don’t believe that the finance sector will be able to avoid a tax that is well designed. The Swedish taxes of the last century were not well designed and were easily avoided. The British Stamp Duty on the other hand is so well designed it has lasted more than three centuries. Wherever you are in the world, whoever you are trading with, if you buy a share in a company listed in London and you have to pay a tax to George Osborne. Maybe that’s why he wants to stop the European FTT!
We do not believe the scare-mongers who say that the FTT will hit pension funds or pensioners. Only the ones who engage in risky and damaging high frequency trading and gambling on exotic products would be affected, and such a strategy is not good for workers’ pension funds. If pension funds invest long-term in sustainable economic activities, just like for banks, the FTT will be beneficial, not harmful.
But there has to be a change to better behaviour by the finance sector, and if that means pension fund managers taking smaller bonuses and investing for the long term, so be it.
I’m not against a phased introduction, or a low starting rate. If people want to be cautious, I understand – this is a big change. But we must have a clear and binding timetable for extending the tax to derivatives. The French and Italian versions of the tax have not raised enough or changed behaviour much.
We must demand more ambition.