ROBIN HOOD GETS THE GO AHEAD IN EUROPE
The Robin Hood Tax moves forward in a major way, in what is being termed a “milestone for tax policy.” Eleven nations in the European Union are participating in a financial transaction tax, sometimes called a Tobin tax, in Europe per “enhanced co-operation” rules of the EU.
It's another sign that our movement is gathering momentum. As more countries support a Robin Hood tax, it helps eliminate the idea that traders would flee the US market if Congress passed a financial transaction tax.
By the EU rules, a smaller group within the 27-nation EU can pioneer a tax. “Those who want to move ahead, and who appreciate the merits of working more closely on taxation at the EU, can do so,” Algirdas Semeta, the European Commissioner for tax, told the press. Commissioner Semeta said it is possible that the tax could enter into force beginning January 1, 2014.
The 11 countries are Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia. Other countries can opt in later. Sweden, for example, chose not to participate, saying that a “global” tax was needed to protect all national markets. The Netherlands has expressed interested, but would like to see an exemption for their pension funds.
The tax is expected to raise 74 billion Euros annually. The UK, which has a Stamp duty on stock market trading, opted not to participate at this time. But the Robin Hood tax will be collected by investors from the 11 countries when trading on the London Stock Exchange, one of the busiest in the world. This is the so-called “residence principle,” meaning that a financial transaction would be taxed in each case where a resident of one of the participating EU member states was involved even if the transaction was carried out in a country that is not a participant.
Next step: the European Commission brings forward a formal proposal for the tax. The proposal will be based on the September 2011 proposal – a coordinated minimum 0.1% tax rate for trades of stocks and bonds and a 0.01% rate for derivatives trades.
This week, proponents described the aim of the proposal is “for the financial industry to make a fair contribution to tax revenues, whilst also creating a disincentive for transactions that do not enhance the efficiency of financial markets.”
Specific uses of the tax funds have yet to be agreed upon. Some press reports suggest that revenue will go towards bank bailouts in Europe. But Robin Hood tax advocates will continue to call for revenue devoted to social and environmental purposes, to rebuild communities still reeling from the financial collapse of 2008.