Robin Hood Tax Political Update - 2 July 2012                           Richard Carr, Jasmine Burnley, David Hillman and N...
meeting as an opportunity to state that the decision by Finance Ministers to reject the EU 27 wide approachconstituted suf...
4) Where next for the FTT in EuropeWhat type of FTT will be on the table?There are two principle concerns here: what finan...
FranceStrongly supports the FTT. Argued at Ecofin that a quick implementation of the tax would be possible on a more limit...
details and see how it would affect countries outside the ECP FTT. It favours part of the FTT revenue going to the EUbudge...
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Ttf actualizacion julio

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Ttf actualizacion julio

  1. 1. Robin Hood Tax Political Update - 2 July 2012 Richard Carr, Jasmine Burnley, David Hillman and Nicolas MombrialSummary • Significant breakthrough for Financial Transaction Tax (FTT) in Europe as a pioneer group of at least 10 countries agree to move forward with an FTT after the EU 27 option was rejected at the European Finance Ministers’ meeting (Ecofin) on 22 June. • The European Council meeting in their conclusions (29 June) noted that ‘several’ member states, including Germany, France, Italy and Spain, would launch a request for enhanced cooperation with a ‘view to [the] adoption [of an FTT] by December 2012.’ • All roads now lead to the next Ecofin on 10 July (the first under the Cyprus presidency) to take further steps along the road of Enhanced Cooperation. • At the G-20/Rio+20 summits, Barroso and Hollande indicate that FTT revenues should be used for ‘global solidarity’ purposes – development and climate change • Launch of US Robin Hood campaign receives widespread media coverage1) Important European Developmentsa) Ecofin meeting, Luxembourg, 22 JuneThe biggest step yet towards concrete implementation of an FTT was taken at the Ecofin meeting in Luxembourg on 22June. In an ‘orientation debate’, the EU-27 FTT option was finally removed from the table, opening up the way for acoalition of at least 10 cooperating member states to proceed towards FTT implementation. This was helped by a letterfrom the Austrian Finance Ministry explaining their need for meaningful progress to take place in regard to the FTT toensure that partners in their coalition government (principally the Greens) would vote in favour of Austria’s contribution tothe Eurozone stability mechanism. This position was strongly pressed at the outset of the meeting by the Austrian FinanceMinister setting out that delay on the matter of moving forward ahead with the FTT was not an option. Her interventionwas immediately followed by the German Finance Minister, Schauble asking countries to indicate their view of progress bymeans of the Enhanced Cooperation Procedure (ECP). The outcome was a concrete indication that the EU 27 wideproposal must be dropped and an FTT taken forward under Enhanced Cooperation – a procedure allowing forimplementation of a proposal with a minimum participation of 9 countries. At the close of the meeting, theCommission set out the five stages of the Enhanced Cooperation Procedure.The next step requires a letter to be sent on behalf of 9 or more member states requesting the Commission toinitiate an ECP (see appendix below for who will/might/won’t sign). It’s vital that in the run-up to the nextEcofin on 10 July we ensure that as many member states as possible sign that letter.Tax Commissioner Semeta used the Ecofin to make several strong remarks indicating his support for the EnhancedCooperation procedure (ECP), including rebutting George Osborne’s claims that the FTT would harm growth and see90% of all trade relocate (when in fact the 90% figure refers to high frequency trades). He also highlighted the existence ofFTTs already in operation as evidence against the argument that an FTT would result in disruption to the internal marketargument. Ironically, if for divisive tactical reasons, Osborne did in fact highlight the question of where the revenue of theFTT would go, and raised the issue of international development. It is important to press for further indications onEuropean leaders along these lines, building on Hollande’s recent comments (see below).Importantly, in setting out the process to implement the ECP, Semeta, representing the European Commission made clearthat neither the UK – nor any other state – could exercise a veto. ECP will be approved by qualified majority voting -gaining 255 of the 345 votes within the process. At present the 9 ‘definite’ participants indicated in the table belowconstitute 164 votes, meaning 91 will need to be found. This is mapped out in a table below, and in the appendix tothis document. If all the likely to join and possible joiners votes for the ECP) the 255 votes will be reached. But it isimportant to keep the pressure up on those countries wavering on joining. The next Ecofin gathering – the firstof the Cypriot presidency – is on 10 July.b) European Council Meeting, Brussels, 28-29 JuneWhen leaders met in Brussels, on 28-29 June, the meeting was dominated by discussions over sovereign debt/Eurobonds,leaving little space for discussion on an FTT despite the agreement to move forward by Finance Ministers just days before.However, the Council conclusions did reference the decision to take forward an FTT, stating that ‘Several Member Statestherefore will launch a request for an enhanced cooperation [on an FTT], with a view to its adoption byDecember 2012’. This commitment to a date from leaders is hugely important and provides us with the necessary openingto push for a timetable for implementation to be put in place as soon as possible. President Hollande also used the   1  
  2. 2. meeting as an opportunity to state that the decision by Finance Ministers to reject the EU 27 wide approachconstituted sufficient legal basis to take the first step along the road to enhanced cooperation He also took theopportunity to confirm that an FTT would be defined and in place by the end of 2012. As well as pressuring EU leadersto stick to this timetable, it is important to extract indications as to how much of FTT receipt may be used for developmentand climate change purposes.2) Global moments – G20 and Rio + 20The month of June saw the FTT raised in high profile global fora at the G20 and Rio+20 summits in Mexico and Brazil.Though not on the official agenda, Barroso, President of the European Commission took the opportunity of his pressbriefing at the G20 to nail the EC’s colours to the mast on the FTT, stating that Europe was both close to an agreement onthe FTT and that such finance must be used for “global solidarity”. This is the first public admission the EC has madeclearly linking a European FTT to spending on development and climate change and an extremely opportune politicalmoment to announce it given the decision to go ahead with an Enhanced Cooperation FTT at the European FinanceMinisters meeting just a few days later (see below). President Hollande also used his press conference to talk about the needfor action on an FTT, linking it to the need for innovative finance for development and climate change.Just days later at the Rio+20 summit, Hollande spoke out more explicitly in favour of an FTT, stating his long-standingsupport for the creation of an FTT, noting there would be negotiations at the June European Council for an FTT under anEnhanced Cooperation process, and clearly indicating that part of these revenues should be used for development. It is ofgreat potential use to have leaders clearly stating that a European FTT should go in part to tackling poverty, developmentand climate change. The battle is now on to ensure that all European backers of an FTT are on board with this.Hollande’s quote at the G20: I supported for a long time, I do now as President of the French Republic, the creation of a Financial Transaction Tax. And I pledge once again that a major part of the revenues from this tax should be used for development objectives. (...) Everyone knows that the direct aid for development, in a context of crisis and budget constraints, are likely to stagnate, so if we want to achieve our commitments, we must raise all the potential revenues. There are several ones: the carbon contribution, taxes on a number of products, and there is this idea of a financial transaction tax. I know that many of the most liberal countries, in the economic sense, do not want this tax. So, a number of European countries, it will be the subject of the negotiation that will take place at the end of June, the European Council, a number of countries may, under what is called an enhanced cooperation, create this FTT and a part of these revenues should be used for development.Barroso prior to G-20: As I have said before, we want a Financial Transaction Tax to become a reality, in Europe and if possible at global level. It is a question of fairness and it would enable us to help more of the worlds poor. A Financial Transaction Tax with other innovative ways of financing development can be a contribution to global solidarity…I expect the European Union to reach a conclusion soon that would allow an FTT to move closer to realisation in Europe and inspire a global solution. I will make this point also at the Rio+20 conference which I will attend in the coming days.3) US CampaignOn Tuesday 19 June the US Robin Hood Campaign was officially launched with rallies in 15 cities across the United States.In New York activists placed Robin Hood masks on some of the city’s best known statues whilst nurses, AIDs activists andothers lined the hallways outside the Congressional hearing of JP Morgan CEO, Jamie Dixon. On the same day, a video forthe campaign featuring actor Mark Ruffalo and Chris Martin of Coldplay was launched online and saw over 18,000 views inits first week.The campaign has seen much press coverage. Highlights included a blog from movie star Mark Ruffalo on the HuffingtonPost homepage, hitting the business section of the New York Times, a great round up in the Guardian and an opinionpiece from the National Nurses Uniteds Executive Director, Rose Ann DeMoro. Mark Ruffalo has also appeared on UStalk shows, including Bill Maher, promoting the FTT.With the campaign now firmly established, more organisations continue to sign on and a high profile economists’ event isplanned with Sachs and Stiglitz. A recent poll showed that 63% of Americans support the tax. The campaign aims to buildon this momentum during this period.   2  
  3. 3. 4) Where next for the FTT in EuropeWhat type of FTT will be on the table?There are two principle concerns here: what financial instruments are taxed, and where the revenue goes. Thankfully, itnow seems that the Financial Activities Tax (on profits/remunerations rather than transactions) is off the Europeannegotiating table, but that does not mean the optimal type of FTT has yet been secured. Several nations – not least France– are arguing that the initial tax should be limited to a levy on share transactions only. On the other hand, others, such asGermany, are pushing for a wider tax – possibly including currency (although currency is complicated by the need to get allEurozone states involved). It is crucial that we continue to press the case for as comprehensive an FTT as possible: thescope of it must be broad and include shares, bonds and derivatives (including currency derivatives). On the revenue side,Hollande and Barroso’s recent comments should also be used as a means to press other leaders to adopt a similar stance inrespect of the proceeds from an FTT going to development and climate change.Overview on ECP – as of 2 July – QM Voting weighting in bracketsDefinite Likely to Possible Difficult to Unlikely OutParticipants join joiners say to JoinAustria (10) Estonia (4) Latvia (4) Bulgaria (10) Ireland (7) Czech Rep (12)Belgium (12) Finland (7) Lithuania (7) Cyprus (4) Denmark Malta (3) (7)France (29) Luxembourg (4) Sweden (10)Germany (29) Netherlands (13) UK (29)Greece (12) Poland (27)Italy (29) Romania (14)Portugal (12) Slovakia (7)Spain (27) Hungary (12)Slovenia (4)TOTAL 11 88 14 14 54VOTES: 164ConclusionWe need to redouble our efforts: to ensure any countries considering joining an enhanced cooperation FTT doso, and to ensure that as the process for putting an FTT in place is shaped, the commitment to spend itsrevenues on tackling poverty at home and abroad and addressing climate change are embedded as early aspossible. In the run up to the next Ecofin (10 July) it is vital that as many countries as possible indicate theirwillingness – through a letter to the commission – to participate in an enhanced cooperation FTT. The minimumis 9 nations, but 14 nations (i.e. a majority of member states) is a distinct possibility we should be looking toachieve. In the coming months we should aim for the inclusion of all Eurozone countries, which would allowcurrency transactions (ie euro trades in the wholesale market) to be taxed, as well. ================================================Appendix: Towards Enhanced Cooperation - state of play in each countryDefinitely in:AustriaVery much the driving force at Ecofin. Aside from supporting the principle, needs the FTT for internal political reasons(see above).BelgiumSupport EC proposal, would prefer at EU 27 but searching for alternatives is just delaying the process. They arecomplementary not a replacement. Ready for ECP while preventing distortions.   3  
  4. 4. FranceStrongly supports the FTT. Argued at Ecofin that a quick implementation of the tax would be possible on a more limitedscope along the lines of stamp duty on share transactions.GermanySent a letter to all 27 MS asking them to move ahead with Enhanced Cooperation, then subsequently asked for a tour detable at Ecofin.GreeceWould prefer EU27 option but will go with the ECP (still need discussion however).ItalyAt Ecofin they expressed qualified support and pointed to the importance of other factors, most obviously the approval ofthe Stability Mechanism Treaty. Monti has since continued this line of broad support for ECP on the FTT but within awider framework including agreement on sovereign debt and spread protection mechanisms (i.e. Eurobonds).PortugalSupports FTT and willing to look at alternatives including ECP.SloveniaSupports FTT, would prefer it at EU-27 level but as this is not possible in the short or medium term and as it is alsodemanded in Slovenia in the negotiation with the Trade Unions on the fiscal pact, Slovakia is willing to join the ECPthough still have many questions. Slovakia believes that fall in GDP has been greatly overestimated; people and tradeunions demand a FTT.SpainSpain open to ECP on a gradual basis. Stressed the need to minimize distortive effects on capital flows.Likely to join Enhanced Co-operationEstoniaECP could be a possibility. They need to discuss within the government and to have a greater understanding of what anECP FTT would look like.FinlandSupports FTT and EC’s proposal and believe it is important to find common EU27 solution. That said, they see thebenefits of ECP but first need to know the scope and the type of tax.Possible joinersHungaryGave no indication either way at Ecofin, though has recently raised the level of receipt (from 280bn forints to 380bn –around $1.6US) its plans to collect from its unilateral FTT. It is likely to use these revenues for domestic economic stimulusprojects.LatviaAll possible alternatives at EU27 must be looked at; they stressed the need for an impact assessment of ECP on the internalmarket. They argue it is not the time for the ECP, and have not exhausted all other solutions. Essentially they are totallyopen to taking any path.LuxembourgDid not oppose ECP at Ecofin but pointed out that as financial services represented 30% of GDP any decision could notbe taken lightly. There was need to see the proposals, they stated.Netherlands – Swinging state?At the Ecofin the Netherlands declared they were not against the Ecofin per se, but that the commission needed toexamine the other alternatives more fully. However, in the days after Ecofin, and after pressure from the leftist parties inthe Netherlands, the Dutch have moved from a ‘no’ to a ‘conditional yes.’ The Netherlands is keen to see pension fundsexempt from the tax however, and this is likely to form a part of their ‘ask’ for joining any ECP.PolandPrefers the FAT but would not stop a FTT progressing. Not clear if they would take part in it yet – they want to see more   4  
  5. 5. details and see how it would affect countries outside the ECP FTT. It favours part of the FTT revenue going to the EUbudget.RomaniaStill has concerns re the potential risk but not averse to continuing discussionsOn the potential impact, costs, and effect on growth. If a majority is in favour, Romania would “stay with them” (not clearwhether they meant they would allow the ECP to go ahead or support it).SlovakiaHas a bank levy, supports EC proposal for EU27 FTT, but believe alternatives need to be explored. Ready to explore ECPbut it should be seen as a last resort solution. They would not object to it.Difficult to sayBulgariaDid not speak at the Ecofin.CyprusAgree that it is complicated to find an EU 27 consensus. Need to explore procedural alternatives including ECP if all otheravenues have been exhausted. They are the incoming presidency of the EU (commenced 1 July 2012) and committed tocontinue FTT discussions. Cyprus has just sought bailout support.Unlikely to joinIrelandHas a Stamp Duty but not convinced it can go beyond this without relocation to London, Amsterdam etc. It claims itcannot join ECP because of the risk of financial services flight; criteria for ECP have to be met rigorously and any negativeimpact on others must be ruled out. It expressed concerned that ECP on such a central economic issue would set adangerous precedent, though will not attempt to stop those who feel the need to go ahead.DenmarkGiven the nature of the Danish coalition, and the position of Finance Minister Vestager, it seems unlikely that Denmarkcould join ECP in the near future.Definitely Against Joining Enhanced CooperationCzech RepublicPrefers discussion on other alternatives. It does not have a position on ECP yet as it wishes to know the impact of theECP.MaltaHas a Stamp Duty but does not support the EC’s proposal on FTT. It would however not object to ECP by others – adefinitive position will be taken once the details of ECP are known.SwedenSupports financial sector’s contribution to the crisis (such as via FAT) but rules out supporting an EU-27 FTT due to itsconcerns regarding the impact on growth. It would like to see more work being done to explore FAT, but accepts that theEU-27 EC proposal is dead. It reserves its position on ECP, but would prefer a compromise of a limited tax at EU-27level.UKGeorge Osborne expressed the belief that the FTT would decrease EU GDP by 1.7-3%, and see a 90% relocation of trade.He reiterated the UK’s belief that the tax should be done globally or not at all, but would not stop – subject to notadversely affecting the European economy - moves towards ECP. He tried to divide the coalition of the willing by raisingthe question of where FTT revenues would be allocated.ENDS   5  

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