By Owen Tudor, TUC
Over the past week, there have been several stories in the media suggesting that the European Financial Transactions Tax (what we call the Robin Hood Tax) was being watered down. Many of the stories appeared in media outlets that are already hostile to the Robin Hood Tax, such as CityAM and the Daily Telegraph. Even the generally pro-FTT Guardian printed the rumour. Stories like these have been appearing ever since we began the campaign (we've lost count of the number of reports that the German Government had dropped the tax!) but these should be treated with scepticism, if not outright disbelief.
The claim was originally disseminated through a Reuters report that suggests several sources were involved (although it has been speculated that there was only a single source for the main thrust of the story). Described as an ‘un-named official’, this source reported that the level of the European FTT being negotiated by 11 European governments was going to be reduced from 0.1% to 0.01%, seeing revenues fall dramatically from €34bn to €3.4bn a year. The scaling back was to avoid a damaging impact on financial markets and was supposed to have been discussed at the latest meeting of the 11 governments' officials in May.
Where the story falls down
The story itself is riddled with inconsistencies. The negotiators' group agreed earlier in the year to postpone talks on the rates until later in the year, and they have not moved away from that position – so the claim that any such decision has taken place is simply untrue.
In addition, the 0.1% rate of tax mentioned in the stories is the one for share trading – here in the UK, we already have an FTT on share deals that’s five times that (0.5%)! It's very unlikely that EU member states implementing the Robin Hood Tax would be worried by the effects on the markets of a tax planned to be only 1/5th of the tax already successfully applied at the venerable FTSE.
It's possible that the negotiators did discuss what impact a 0.1% or 0.01% rate would have, although they definitely didn't have a substantive discussion on it. They certainly *did* discuss extending the scope of the tax to cover some currency transactions, which would mean the tax would yield far more than €34bn a year! Strangely, that discussion didn't make it into the papers…
So what's going on with these media stories then?
The Robin Hood Tax has some very rich and powerful enemies – some of the very same people who are likely to end up paying it. They are currently mounting a frantic, furious and intense media campaign to spread misinformation about the progress of the negotiations. Their purpose is to discourage campaigners and governments, hoping to shrink our resolve.
But we are not so easily deterred. EU Tax Commissioner Algirdas Semeta - who is himself a recent convert to the tax – had this to say: "It is really premature to say what will be the final outcome of the situation because member states are currently in the phase of the first reading… I see these news reports as an attempt to create a sensation. They do not reflect what is currently going on in the [EU] Council". Our own rebuttal echoed many of the sentiments outlined in Mr Semeta’s statement.
These stories designed to muddy the waters will come and go, but it's our duty as campaigners to ensure a fair and balanced response. We need to remind governments and the public that the Robin Hood Tax remains the best option around for reining in bankers, generating new revenue for domestic and global needs, and rebalancing the finance sector from gambling on the markets to investing in the real economy.
Keep up the campaign!