That’s what my Labour regional colleague Glenis Willmott MEP calls the EU’s proposed “Financial Transaction Tax” (FTT). It perfectly fits the Labour narrative. The economic crisis was caused by fat-cat bankers, but the costs are borne by the long-suffering poor. It’s time to get our own back. Let’s stick it to the fat cats, and charge them 0.1% on each and every transaction. That’s a tiny percentage. It’s almost like free money. And it’ll raise £50 billion, which we can spend on the poor and disadvantaged. No more cuts. Problem solved.
Glenis’s Robin Hood tax, in the best tradition of the story, takes money from the rich and gives it to the poor. If only.
We should note in passing that the causes of the economic crisis started not with the financial services industry, but with politicians and central bankers (it was Jimmy Carter and Bill Clinton who got Fannie Mae and Freddie Mac offering mortgages to borrowers who’d never repay). Certainly bankers made unwise decisions, but we can’t blame the fish for the water they swim in.
And Glenis’s plan is so much wishful thinking. The idea of an FTT, or “Tobin Tax”, was actually tried in Sweden. And failed. The main effect was to drive financial companies off-shore. These businesses are very easy to move. Transactions take place in effect on the internet. So you can do it in Zurich or Chicago or Hong Kong just as easily as in London. This is why Conservatives say, quite rightly, that we should only introduce it if the whole world does so at the same time. In fact there are good reasons not to do it at all.
Zero point one percent sounds almost trivial. But £50 billion is a huge new tax burden, which will depress growth and undermine competitiveness.
It’s not really a Robin Hood Tax. It’s a Sherriff of Nottingham Tax. It’s not taking money from fat cats and giving it to the poor. It’s taking money from old ladies’ pension funds and giving it to the robber barons in Brussels. Don’t imagine for a moment that this money would be spent on good causes at home. The leaders of the EU are salivating at the idea of this huge sum out of nowhere, as it were, which they can spend on their pet projects, like their Goebbels-inspired “Museum of European History”.
It’s also an example of EU rules that sound perfectly fair and even-handed, but hit the UK far worse than other countries. A previous EU attempt to regulate credit would have wiped out the UK’s off-set mortgage business. On the continent, they simply didn’t have off-set mortgages to any extent, so they didn’t understand the problem.
The infamous Temporary Workers Directive hits Britain disproportionately, because we have better-developed and more flexible labour markets than those of our continental partners.
And because some 80% of EU financial transactions take place in London, we’d pay £40 billion of the planned £50 billion. This is a dagger pointed at the heart of the City. Or as Dan Hannan put it, “They want to bail out the euro, and they’re sticking us with the bill”. Cameron and Osborne (who to be fair are talking tough) have a real duty to deliver a veto on this issue. We will never forgive them otherwise.
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