- Significant breakthrough in Europe as at least 10 countries agree to implement a Financial Transaction Tax (FTT) through enhanced cooperation after the EU-wide proposal was rejected. - European leaders committed to adopting an FTT by December 2012 and indicated FTT revenues should support development and climate change. - Launch of US Robin Hood campaign receives widespread media coverage, helping bring more organizations and attention to the issue.

1. Robin Hood Tax Political Update - 2 July 2012
Richard Carr, Jasmine Burnley, David Hillman and Nicolas Mombrial
Summary
• 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 coverage
1) Important European Developments
a) Ecofin meeting, Luxembourg, 22 June
The biggest step yet towards concrete implementation of an FTT was taken at the Ecofin meeting in Luxembourg on 22
June. In an ‘orientation debate’, the EU-27 FTT option was finally removed from the table, opening up the way for a
coalition of at least 10 cooperating member states to proceed towards FTT implementation. This was helped by a letter
from the Austrian Finance Ministry explaining their need for meaningful progress to take place in regard to the FTT to
ensure that partners in their coalition government (principally the Greens) would vote in favour of Austria’s contribution to
the Eurozone stability mechanism. This position was strongly pressed at the outset of the meeting by the Austrian Finance
Minister setting out that delay on the matter of moving forward ahead with the FTT was not an option. Her intervention
was immediately followed by the German Finance Minister, Schauble asking countries to indicate their view of progress by
means of the Enhanced Cooperation Procedure (ECP). The outcome was a concrete indication that the EU 27 wide
proposal must be dropped and an FTT taken forward under Enhanced Cooperation – a procedure allowing for
implementation of a proposal with a minimum participation of 9 countries. At the close of the meeting, the
Commission 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 to
initiate an ECP (see appendix below for who will/might/won’t sign). It’s vital that in the run-up to the next
Ecofin 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 Enhanced
Cooperation procedure (ECP), including rebutting George Osborne’s claims that the FTT would harm growth and see
90% of all trade relocate (when in fact the 90% figure refers to high frequency trades). He also highlighted the existence of
FTTs already in operation as evidence against the argument that an FTT would result in disruption to the internal market
argument. Ironically, if for divisive tactical reasons, Osborne did in fact highlight the question of where the revenue of the
FTT would go, and raised the issue of international development. It is important to press for further indications on
European 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 clear
that 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 below
constitute 164 votes, meaning 91 will need to be found. This is mapped out in a table below, and in the appendix to
this document. If all the likely to join and possible joiners votes for the ECP) the 255 votes will be reached. But it is
important to keep the pressure up on those countries wavering on joining. The next Ecofin gathering – the first
of the Cypriot presidency – is on 10 July.
b) European Council Meeting, Brussels, 28-29 June
When 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 States
therefore will launch a request for an enhanced cooperation [on an FTT], with a view to its adoption by
December 2012’. This commitment to a date from leaders is hugely important and provides us with the necessary opening
to push for a timetable for implementation to be put in place as soon as possible. President Hollande also used the
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2. meeting as an opportunity to state that the decision by Finance Ministers to reject the EU 27 wide approach
constituted sufficient legal basis to take the first step along the road to enhanced cooperation He also took the
opportunity to confirm that an FTT would be defined and in place by the end of 2012. As well as pressuring EU leaders
to stick to this timetable, it is important to extract indications as to how much of FTT receipt may be used for development
and climate change purposes.
2) Global moments – G20 and Rio + 20
The 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 press
briefing at the G20 to nail the EC’s colours to the mast on the FTT, stating that Europe was both close to an agreement on
the FTT and that such finance must be used for “global solidarity”. This is the first public admission the EC has made
clearly linking a European FTT to spending on development and climate change and an extremely opportune political
moment to announce it given the decision to go ahead with an Enhanced Cooperation FTT at the European Finance
Ministers meeting just a few days later (see below). President Hollande also used his press conference to talk about the need
for 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-standing
support for the creation of an FTT, noting there would be negotiations at the June European Council for an FTT under an
Enhanced Cooperation process, and clearly indicating that part of these revenues should be used for development. It is of
great potential use to have leaders clearly stating that a European FTT should go in part to tackling poverty, development
and 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 world's 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 Campaign
On 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 and
others lined the hallways outside the Congressional hearing of JP Morgan CEO, Jamie Dixon. On the same day, a video for
the campaign featuring actor Mark Ruffalo and Chris Martin of Coldplay was launched online and saw over 18,000 views in
its first week.
The campaign has seen much press coverage. Highlights included a blog from movie star Mark Ruffalo on the Huffington
Post homepage, hitting the business section of the New York Times, a great round up in the Guardian and an opinion
piece from the National Nurses United's Executive Director, Rose Ann DeMoro. Mark Ruffalo has also appeared on US
talk 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 is
planned with Sachs and Stiglitz. A recent poll showed that 63% of Americans support the tax. The campaign aims to build
on this momentum during this period.
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3. 4) Where next for the FTT in Europe
What 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, it
now seems that the Financial Activities Tax (on profits/remunerations rather than transactions) is off the European
negotiating 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 as
Germany, are pushing for a wider tax – possibly including currency (although currency is complicated by the need to get all
Eurozone states involved). It is crucial that we continue to press the case for as comprehensive an FTT as possible: the
scope 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 in
respect of the proceeds from an FTT going to development and climate change.
Overview on ECP – as of 2 July – QM Voting weighting in brackets
Definite Likely to Possible Difficult to Unlikely Out
Participants join joiners say to Join
Austria (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 54
VOTES: 164
Conclusion
We need to redouble our efforts: to ensure any countries considering joining an enhanced cooperation FTT do
so, and to ensure that as the process for putting an FTT in place is shaped, the commitment to spend its
revenues on tackling poverty at home and abroad and addressing climate change are embedded as early as
possible. In the run up to the next Ecofin (10 July) it is vital that as many countries as possible indicate their
willingness – through a letter to the commission – to participate in an enhanced cooperation FTT. The minimum
is 9 nations, but 14 nations (i.e. a majority of member states) is a distinct possibility we should be looking to
achieve. In the coming months we should aim for the inclusion of all Eurozone countries, which would allow
currency transactions (ie euro trades in the wholesale market) to be taxed, as well.
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Appendix: Towards Enhanced Cooperation - state of play in each country
Definitely in:
Austria
Very much the driving force at Ecofin. Aside from supporting the principle, needs the FTT for internal political reasons
(see above).
Belgium
Support EC proposal, would prefer at EU 27 but searching for alternatives is just delaying the process. They are
complementary not a replacement. Ready for ECP while preventing distortions.
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4. France
Strongly supports the FTT. Argued at Ecofin that a quick implementation of the tax would be possible on a more limited
scope along the lines of stamp duty on share transactions.
Germany
Sent a letter to all 27 MS asking them to move ahead with Enhanced Cooperation, then subsequently asked for a tour de
table at Ecofin.
Greece
Would prefer EU27 option but will go with the ECP (still need discussion however).
Italy
At Ecofin they expressed qualified support and pointed to the importance of other factors, most obviously the approval of
the Stability Mechanism Treaty. Monti has since continued this line of broad support for ECP on the FTT but within a
wider framework including agreement on sovereign debt and spread protection mechanisms (i.e. Eurobonds).
Portugal
Supports FTT and willing to look at alternatives including ECP.
Slovenia
Supports FTT, would prefer it at EU-27 level but as this is not possible in the short or medium term and as it is also
demanded in Slovenia in the negotiation with the Trade Unions on the fiscal pact, Slovakia is willing to join the ECP
though still have many questions. Slovakia believes that fall in GDP has been greatly overestimated; people and trade
unions demand a FTT.
Spain
Spain open to ECP on a gradual basis. Stressed the need to minimize distortive effects on capital flows.
Likely to join Enhanced Co-operation
Estonia
ECP could be a possibility. They need to discuss within the government and to have a greater understanding of what an
ECP FTT would look like.
Finland
Supports FTT and EC’s proposal and believe it is important to find common EU27 solution. That said, they see the
benefits of ECP but first need to know the scope and the type of tax.
Possible joiners
Hungary
Gave 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 stimulus
projects.
Latvia
All possible alternatives at EU27 must be looked at; they stressed the need for an impact assessment of ECP on the internal
market. They argue it is not the time for the ECP, and have not exhausted all other solutions. Essentially they are totally
open to taking any path.
Luxembourg
Did not oppose ECP at Ecofin but pointed out that as financial services represented 30% of GDP any decision could not
be 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 to
examine the other alternatives more fully. However, in the days after Ecofin, and after pressure from the leftist parties in
the Netherlands, the Dutch have moved from a ‘no’ to a ‘conditional yes.’ The Netherlands is keen to see pension funds
exempt from the tax however, and this is likely to form a part of their ‘ask’ for joining any ECP.
Poland
Prefers the FAT but would not stop a FTT progressing. Not clear if they would take part in it yet – they want to see more
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5. details and see how it would affect countries outside the ECP FTT. It favours part of the FTT revenue going to the EU
budget.
Romania
Still has concerns re the potential risk but not averse to continuing discussions
On the potential impact, costs, and effect on growth. If a majority is in favour, Romania would “stay with them” (not clear
whether they meant they would allow the ECP to go ahead or support it).
Slovakia
Has a bank levy, supports EC proposal for EU27 FTT, but believe alternatives need to be explored. Ready to explore ECP
but it should be seen as a last resort solution. They would not object to it.
Difficult to say
Bulgaria
Did not speak at the Ecofin.
Cyprus
Agree that it is complicated to find an EU 27 consensus. Need to explore procedural alternatives including ECP if all other
avenues have been exhausted. They are the incoming presidency of the EU (commenced 1 July 2012) and committed to
continue FTT discussions. Cyprus has just sought bailout support.
Unlikely to join
Ireland
Has a Stamp Duty but not convinced it can go beyond this without relocation to London, Amsterdam etc. It claims it
cannot join ECP because of the risk of financial services flight; criteria for ECP have to be met rigorously and any negative
impact on others must be ruled out. It expressed concerned that ECP on such a central economic issue would set a
dangerous precedent, though will not attempt to stop those who feel the need to go ahead.
Denmark
Given the nature of the Danish coalition, and the position of Finance Minister Vestager, it seems unlikely that Denmark
could join ECP in the near future.
Definitely Against Joining Enhanced Cooperation
Czech Republic
Prefers discussion on other alternatives. It does not have a position on ECP yet as it wishes to know the impact of the
ECP.
Malta
Has a Stamp Duty but does not support the EC’s proposal on FTT. It would however not object to ECP by others – a
definitive position will be taken once the details of ECP are known.
Sweden
Supports financial sector’s contribution to the crisis (such as via FAT) but rules out supporting an EU-27 FTT due to its
concerns regarding the impact on growth. It would like to see more work being done to explore FAT, but accepts that the
EU-27 EC proposal is dead. It reserves its position on ECP, but would prefer a compromise of a limited tax at EU-27
level.
UK
George 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 not
adversely affecting the European economy - moves towards ECP. He tried to divide the coalition of the willing by raising
the question of where FTT revenues would be allocated.
ENDS
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