EU Shenanigans, Financial Transaction Taxes and ReferendaJanuary 25th, 2013 • 1 Comment
Firstly, a splinter group of countries have voted to introduce a financial transactions tax (FTT), also known as a Tobin tax. Unsurprisingly, this is a tax on financial transactions and will be levied at a rate of 0.1% on the value of any trade in shares or bonds, and 0.01% of any financial derivative contract. Some people still blame the banks for the 2007/8 fall into recession, and a FTT might just be a way of punishing the naughty chaps. Or it could just be cutting your nose off to spite your face. The UK is not one of the countries adopting the new tax; the 11 ‘enhanced cooperation’ group members are France, Germany, Spain, Portugal, Italy, Belgium, Austria, Slovakia, Slovenia, Greece and Estonia.
This is important because it is the first time something like this has been passed by a small group of EU countries, after the scheme failed to win approval from the 27 member states or the 17 Eurozone countries. The 11 countries can now charge the FTT in isolation.
There are a number of countries in the EU who are not in favour of such a tax- Luxembourg and Cyprus for example, as large financial centres did not think the new tax was a Jolly Good Idea.The UK (which already charges 0.5% stamp tax on share transactions) and Sweden just think it’s a bit silly unless the whole world joins in; if it becomes too expensive to trade in Europe, traders will just do their business elsewhere. This is only the third time a splinter group has ever been ‘allowed’ to do something where there is not a general EU consensus.
Algirdas Semeta, European Commissioner for tax said: “It is a milestone for EU tax policy, as it paves the way for more ambitious member states to progress on a tax file, even when unanimity could not be achieved.”
This lack of agreement within Europe gave Dave good fodder for his EU referendum speech on Wednesday. Britain has been criticised in the past for being a billy-no-mates within the EU, deliberately distancing itself from some of our Continental neighbours. Accusations have been hurled suggesting that if Britain doesn’t want to play with the EU properly, then perhaps it shouldn’t play at all.
However, using the FTT tax as an example, Dave thinks that the EU should become a more “flexible, adaptable and open European Union” to combat the “growing frustration” in the UK that the EU is “something that is done to people rather than acting on their behalf.” Rather than Britain being isolated and isolationist, he thinks the EU should be more accommodating, and should scrap the “one size fits all approach which implies that all countries want the same level of integration.” When clearly, they don’t.
Dave announced that we will have a referendum on EU membership, probably in 2018, but that he wants us to stay as part of Europe (as we can’t very well move house), but on revised terms- suggesting something more like NATO (where you can ignore direct orders not to go to war for example) rather than the current EU rigidity and loss of sovereignty.
Wonder what the rest of the EU will think about that.
Nice article. You could also mention the fact that within this group of 11 countries some have already activated their own domestic FTT such as France which implemented the tax under in August last year, or Italy which has launched a similar process.
Banks are currently wasting energy to cope with it while as it goes, these national laws will more than likely be replaced by a (semi)European rule and resources will again be wasted in order to integrate the change.
A not-so-bad idea implemented in a not-so-good way if you ask me.