The document summarizes opposition to the proposed EU Financial Transactions Tax (FTT) and responses to a recent legal opinion questioning part of the tax. In 3 sentences: A recent legal opinion found that one element ("residence principle") of the proposed EU FTT may conflict with EU law, but supporters argue this affects only a minor part of the tax and could be amended, while the tax's other principles remain valid; opponents have exaggerated the opinion's impact in an effort to prematurely defeat the tax, as they have done many times before, but supporters plan to increase advocacy for governments to decide tax policy rather than banks. The European Commission and Germany still support the FTT and plan to implement it with possible

1. Robin Hood Tax opponents clutch at legal strawRobin Hood Tax opponents clutch at legal straw
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It’s been quite a week for the opponents of the EU Financial Transactions Tax (FTT).
In yet another – increasingly desperate – attempt to pronounce the death of the
proposal, a legal opinion from one part of the EU structure, dealing with one
element of the FTT is pronounced sufficient to destroy the proposal. Well, as Joe
Hill would have said “I ain’t dead!”
The fact that this story has got so much uncritical (indeed, staggeringly poorly
informed) coverage in so many respectable journals is itself part of the story. The
well-funded and staff-rich finance sector PR industry has yet again been in overdrive
to blow up a minor story into front page news. Finance sector’s bigwigs should
beware of deluding themselves into believing they have won when they haven’t. And
more importantly than that, FTT supporters should on no account believe the
exaggerations of our opponents, although our rebuttal got little coverage (thanks,
Heather!)
So what’s really happened? The legal service of the EU Council of Finance Ministers
(just one small part of the EU legal service) has produced a legal opinion (not tested
and not binding) that says one element of the proposed FTT (the residence principle,
more below) may be contrary to the legal principles of the EU and therefore may
have to be changed. Other parts of the EU legal service disagree, the European
Commission disagrees, and the German government – for one – disagrees. I suspect
that wouldn’t have made so many headlines…
First, what’s the substance of the argument? The proposed FTT rests on several
principles defining which transactions would be subject to the tax. The residence
principle, which this legal opinion is about (it’s quite explicit that “Other criteria to
determine the applicability of the tax regime, be they already present in the
proposal or otherwise conceivable, are not the subject of the discussion in this
opinion”) says that the tax is paid whenever one of the seller or buyer is based in a
country implementing the tax. It’s one of the measures designed to prevent people
from moving to avoid the tax, but it’s not the only one. The issuance principle is the
one which underpins the UK Stamp Duty, for example, which says that if the
financial product being sold is registered in a country implementing the tax, then
the sale is taxable.
The Robin Hood Tax campaign has always favoured the issuance principle, because
it’s been shown to have worked (40% of Stamp Duty is paid by buyers and sellers
based outside the UK), and it prevents transactions moving, rather than the parties
to those transactions – so it’s more like VAT. We had to fight to get the European
Commission to include the issuance principle in the FTT proposal, and it looks like
that was a smart move.
Second, what’s the status of the legal opinion? Well the clue is partly in the name.
It’s an opinion, not a fact – lawyers are like that, they can produce many different
opinions, which is why the actual decisions are left to courts, rather than lawyers.
Until tested in the courts, this is just a view, and it’s a view that the Commission’s
own legal service doesn’t agree with. It’s the view of the lawyers who work
exclusively for the EU’s Finance Ministers and it rather reflects the scepticism of
finance ministries.
OwenTudor

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Third, what will happen as a result? Well, er, it looks like nothing. Both the EU Tax
Commissioner, Algirdas Semeta, and the government most committed to the FTT,
Germany, appear to have dismissed the legal opinion because of “second…” above.
Semeta tweeted that “FTT is legally sound and fully complies with EU treaties and
international law.” But even if the legal opinion was found to be correct, the FTT
proposal would simply have to be amended slightly to stress the issuance principle
instead, and it could be implemented as planned.
But, fourth, what does this tell us about the way that the FTT’s opponents operate,
and about what we as supporters have to do in response? Throughout the campaign
for an FTT, the finance sector corporate PR lobby has missed no opportunity to
pronounce the tax dead, finished, about to be scrapped, or – a subtle one, this,
better replaced by something that would take far less money in tax from the
admittedly greedy bankers. The German government has reportedly abandoned its
support for the FTT on at least two dozen occasions over the past three years, and on
none of those occasions has it been remotely true. Should journalists reporting on
this be a little more sceptical, a little more willing to ask both sides of the debate for
their opinion? Yes, indubitably. (As a further footnote, you have to wonder how this
secret legal opinion was so quickly in the hands of the media – will there be a
Snowden-style witch-hunt for the leaker? No, there won’t.)
Those of us who want a Robin Hood Tax (presciently reaffirmed by the TUC this
week in a motion written weeks ago which pledged “continued support for the
introduction of a financial transactions – or Robin Hood – tax, in the face of
sustained finance sector lobbying against this”), the lesson is that we need to step up
the campaign – especially in the media – to get the case put for democratic
governments to decide who pays what tax, rather than the spin doctors of wealthy
bankers.
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