Closing in on EU Financial Tax Victory
When I was cutting my teeth in campaigning as part of the movement to end Apartheid in South Africa in the 1980s, we were told repeatedly it could never happen. I moved on from that to another campaign that looked pretty hopeless at times but was also ultimately successful – the effort to ban landmines.
Over the past six years I’ve devoted much of my time to coordinating international advocacy for financial transaction taxes (also known as the Robin Hood Tax or Wall Street Speculation Tax).
And again, I’ve heard the same skepticism over and over – that this could never happen.
And yet today we are very close to achieving a major milestone: the world’s first regional coordinated financial transaction tax among 10 European countries. If we can achieve this victory, it would drive momentum for similar taxes in other countries, including the United States, where Bernie Sanders has managed to make this a presidential debate issue.
On June 17, finance ministers from these 10 countries are expected to announce a deal on the major elements of this new tax. The countries involved are: Austria, Belgium, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia, and Spain.
In advance of this meeting, we’ve been asking people to share their views with EU leaders on why this tax is so important. For most people, by far the top attraction is the potential for massive revenues — money that could be used to protect and create jobs domestically and help states meet their international commitments to save lives in developing countries and combat the threats of climate change.
The European Commission estimates that a tax of 0.1 percent on stock and bond trades and 0.01% on the notional value of derivatives would generate about 31 billion euros ($US 42 billion) per year.
As with the anti-Apartheid and landmines campaigns, there is a strong moral argument behind this international campaign. In a world where financial institutions are the clear winners of globalization, is it not fair that they should contribute to those who have lost out? The answer seems especially clear given these institutions’ culpability in a financial crisis that brought such economic hardship to so many.
Another oft-cited benefit is that such taxes would discourage the purely speculative casino trading that can make markets more volatile. What gets less attention is their potential as a tool for clamping down on tax dodgers. With the “Panama Papers” exposing a vast seam of hidden information, light is splashing across the secret world of tax-avoiding people and companies. Financial transaction taxes could help end this tax secrecy by providing a new source of information on the size and direction of financial flows.
The financial industry is fiercely opposed, which is hardly surprising since no sector wants to be taxed. “Turkeys don’t vote for Christmas,” as they say. But the basic arguments against the tax from the City of London and Wall Street are oddly contradictory. They say, on the one hand, that financial transaction taxes “will do huge damage to the finance sector” and on the other that such taxes “could easily be dodged by firms.”
Well, either the taxes will inflict damage on the banks, or they will be avoided. They can’t do both. But this example demonstrates the tactics of the financial sector: cloud the issue by throwing in any and all arguments, even if they are intellectually inconsistent. At this point in the European talks, there is still a significant risk that the financial sector could prevail in diluting or even derailing a deal.
One of the 10 participating governments — Belgium — appears to be doing the industry’s bidding, chucking in last-minute obstacles to an agreement. Hopefully, rather than be blamed for blocking progress, they will recognize how much support the idea has across Europe and side with the people rather than the banks before June 17.
As with the anti-Apartheid and land mine ban campaigns, we need international solidarity to win. Over the past several years, we’ve worked with allies around the world to build support among more than 1,000 economists, elected officials in numerous countries, including some celebrities and financial industry insiders. More than one million individuals signed a support petition — likely the largest number ever for a tax.
As we enter this critical phase in the campaign in Europe, we’ll need everyone’s support to win this major milestone. The time is now for the most popular tax in history.