Tobin tax

Tax on Financial Transactions

Labour Party

The European Parliament overwhelmingly adopted a resolution to develop a tax on financial transactions this Wednesday in Strasbourg.

Speaking during the debate, the European Commission representative made a point we would all do well to take account of – that without a well-defined redistributive mechanism, the revenue generated could well end up in those few countries with large financial centres. I hope this will be noted back home, since we, as the largest financial centre in Europe, obviously have a special responsibility.

I am also pleased that the resolution urges the European Commission and Council of Ministers to look at how the tax could be used to finance development co-operation and help developing countries to combat climate change.

I also support the part of the resoluton which says that any tax on financial transactions must not harm the banking system’s ability to perform its vital role of financing real economy investments, and must not encourage the migration of capital.   This is linked to the need to avoid negative repercussions on small businesses and individual investors, who surely must be protected from any adverse effects this tax could have on them.

 In order to discourage excessive risk-taking by financial institutions and ensure that the financial industry pays for the damage caused by the financial crisis, the Parliament is asking for pans to be prepared for a global tax. Should a worldwide tax prove unachievable, the EU could consider the option of going it alone.

Parliament is further asking the European Commission to develop the transaction tax plan on a short timetable to be ready to present to the G20 in June. The timing is important as we must not lose the momentum already achieved to introduce this tax.

The Commission is also asked to assess how such a tax could help stabilise financial markets and prevent a similar crisis by targeting “undesirable” transactions. Such transactions would, in the first instance, be identified by the Commission. While preferring a global approach through the G20, the European Parliament also believes that the pros and cons of introducing a purely EU-wide tax should be weighed up.

In its reply to the debate in the European Parliament, the European Commission, who are in favour of the tax and actively considering regulating the financial industry by this means, said it believed the issue is best tackled at global level, since this is the only way to prevent capital flight.

All in all this is a well though out and comprehensive resolution and one which I was happy to vote for.  It’s now up to us as MEPs to keep the momentum going and do all we can to ensure this resolution is put into practice.

President Van Rompuy Proves he is a Man of Vision

Labour Party

You may be forgiven for all the misconceptions you probably have about Herman Van Rompuy, the newish President of the European Council.  He didn’t get much coverage in the UK when he was Prime Minister of Belgium, and most of that written and said about him since becoming President has been negative, sometimes even insulting. 

 President Van Rompuy spoke to the Socialist and Democrat Group this morning, and believe me he is far from lightweight.  His knowledge of economics is outstanding.  What is more, he is capable of strategic thinking and has a genuine vision for Europe, a vision much more in line with British views than you may expect.  President Van Rompuy sees the EU as a grouping of sovereign states with certain common objectives.  I’d certainly buy into that, as I’m sure would the vast majority of people in the UK, except perhaps those on the extreme margins of politics.

 The President showed a rare degree of radicalism this morning, all the more surprising as he is from the centre-right EPP family.  It was his support for the tax on financial transactions which finally convinced me that he is a man we could do business with.  When answering a question from fellow Belgian, Marc Tarabella, it became clear that President Van Rompuy not only supports the “Tobin” tax in principle, but as Belgian Prime Minister he implemented it on a national basis.  You may also be interested to know that the G20 is looking at such a tax and the IMF is preparing a report.    

 The economic issues obviouly revolved around the current downturn.  The President was unrepentant about the EU’s policy of protecting the internal market and the euro and the pursuit of inflationary measures.  He was, on the other hand, clear that we all need to return to balanced budgets in order to pursue social goals such as sustainable pensions and improved health care.  While I would not necessarily support his contention that we need balanced budgets to carry out a social programme, the President does, at least, believe in the social dimension of Europe.  He was also clear that the EU needs to ensure that the new EU 20:20 strategy is successful, unlike the previous Lisbon Strategy which did not achieve anything very much.

 Climate change was the other big topic.  Since Copenhagen has not moved anything forward, Europe needs to keep on working at this agenda.  There were several calls, including one from EPLP Leader Glenis Willmott, for green, sustainable jobs which President Van Rompuy supported wholeheartedly.     

Herman Van Rompuy is an engaging speaker, though like many Europeans he lacks some of the rhetorical flourish so beloved by the British. He gave his presentation in English, he then answered questions in French and understood German as well as his native Dutch.  I wonder how many of us are fluent in at least four languages.  He also listens and made a promise that he would take seriously all the points raised at the Group meeting.

 It’s a real tragedy for us that both President Van Rompuy and the High Representative for Foreign Affairs, our own Baroness Ashton, get such a bad press in Britain.  They are both excellent at their jobs.  One socialist MEP said today that Herman Van Rompuy is the right person in the right place.  The same is true of Cathy Ashton, and we would do well to take a leaf out of the books of many other countries in the European Union and support our national appointees.  

 And finally… it was good to see former Labour MEP Richard Corbett sitting at the top table with President Van Rompuy.  Richard is now head of the President’s Cabinet.  Congratulatons Richard.  You deserve your success and we all know you will do exceptional work  for Herman Van Rompuy and, by extension, for all of us involved in the EU.

Tax on Financial Transactions

Labour Party

Given the recent publicity about the “Robin Hood” tax, it’s perhaps not surprising that it was given an honourable mention at the plenary session of the European Parliament in Strasbourg last week.  An amendment to a resolution on the Conference on Climate Change held in Copenhagen in December suggested a tax on financial transactions, the Tobin tax named after the economist James Tobin who first mooted the idea, to support international climate action.

Although the amendment was defeated due to lack of support from the centre-right and right wing groupings in the European Parliament, I was pleased that many, though sadly not a majority, of MEPs joined with those campaigning to make the Tobin tax a reality. 

We know that Prime Minister Gordon Brown, Nicolas Sarkozy, President of France, and the German Chancellor Angela Merkel have all been strong advocates of  what is becoming known as the “Robin Hood” tax.  You couldn’t find a much better line up than that.  Gordon Brown, in fact, started to lobby for support for the Tobin tax in the City of London in the autumn of last year and I understand the International Monetary Fund is looking at such a plan, despite opposition from the United States.

It is, of course, the international nature of the Tobin tax which it such an ideal tool for raising money for matters which require action in more than one country.  The recently launched campaign in Britain by comedy writer Richard Curtis and popular actor Bill Nighy for such a a “Robin Hood” tax to be levied on banks is rare indeed in that it is popular for its own sake and targeted at an unpopular group – the banks.  Richard Curtis’s proposal to impose a 0.5% tax on international bankers’ transactions could raise up to £250 billion per year, a huge sum half of which would be retained by the country where the deal took place and the other half split between tackling climate change and reducing global poverty.  The plan targets institutions not ordinary people and is set at a level which should not hurt the banks.

You may have thought that even bankers would be hard pushed to oppose a tax which could do so much good at little cost to themselves.  Sadly, this does not appear to be the case as Goldman Sachs apparently orchestrated moves to vote against the “Robin Hood” tax on the campaign’s website.  Fortunately the Goldman Sachs ruse, which showed both the utmost arrogance and disregard for the plight of so many people on our planet, was rumbled.  However, the fact that they tried it on in such a way shows that bankers still have a long way to go before they think the same way as the majority.  

Back in the European Parliament, you will, of course, not be surprised to know that the Tories voted against the Tobin tax amendment.  Although the resolution in question was not legislative and hence only a recommendation to EU member states, European Parliament support for a Tobin tax to fund climate change work would have sent a strong signal.  It would also have put us on the same side as Oxfam, Save the Children, Action Aid, many trade unions, most mainstream churches and celebrities such as Bono who are known for the humanitarian work.  It’s a real tragedy that the right wing in Europe prefers to peddle its reactionary ideology rather than supporting moves to combat climate change and reducing world poverty.