There’s silly, and . . .
If there was an award for the silliest tax initiative dreamt up by the unelected Eurocrats in Brussels over the course of the last couple of decades, the savings tax directive and the CCCTB (that’s the common consolidated corporate tax base, for the uninitiated) would be up there competing for the top prize. But surely the proposed financial transactions tax would win hands down. It’s not that I feel sorry for the banks targeted by this tax. On the contrary; it is because of them that this idea has come about in the first place. I suppose you could say that even without the financial crisis, the Šemetas and Moscovicis of this world (Francois Hollande’s former finance minister has now taken over from Šemeta as Tax Commissioner) would be pushing for a so-called Tobin tax, or Robin Hood tax, whatever you want to call it, anyway. But that’s by the by. The point is that while Professor James Tobin’s and Robin Hood’s intentions were altruistic – granted, the latter’s idea of redistribution relied on a fair amount of violence – it’s not clear who stands to benefit from the EU FTT. And there could be plenty of losers, including the people it was initially intended to benefit. Back in October 2008, a report commissioned by the Ecosocial Forum Europe and presented to the European Council calculated that a 0.01 percent FTT throughout Europe would generate almost EUR83bn in revenues for development projects and other worthy philanthropic ventures in the developing world. However, in September 2011, the Commission’s FTT proposal envisaged revenue of EUR57bn. Then a more conservative EUR35bn tax take was included in the draft FTT directive in January 2013. But, suddenly, these revenues were no longer going to help fight poverty. Nope, they would contribute to the EU’s “own resources,” which is Brussels-speak for the EU budget. But since only just over one-third of the 28 member states are taking part, and there is much uncertainty about where and when the FTT will become due, it is now almost impossible to say how much this tax will bring in. But, again, trying to pin down a revenue figure is ancillary to the central point, which is that the FTT is unworkable in the first place. Yes, it could be argued that the alarmist warnings from finance industry-commissioned reports about the economic fall-out from the FTT are inevitable, and overblown. But it’s harder to dispute the tax’s legal shortcomings, and there are plenty of those, as the European Council’s own lawyers have pointed out (although its conclusions weren’t supposed to be made public). Presumably, one of the reasons that the EU11 (or is it 10 now, after Slovenia seemingly came to its senses?) are still arguing over this tax is because most, if not all of them, want a piece of the action for their own “own resources,” to fritter away as they wish. According to the Commission, as originally conceived, the FTT was supposed to represent “a fair price” for the financial sector to pay for cleaning up the crisis it helped to start. But what price common sense?