Hold your breath because yesterday France did what many, including the UK government, like to pretend is impossible to do – they implemented a tax on the financial sector that will raise money to help the poor.
A 0.2% tax on share transactions will raise the French government about 500 million euros a year, a proportion of which President Hollande has stated will be used to tackle global poverty and the HIV-AIDS epidemic.
Fortunately it will not, as some have predicted, cause the sky to come crashing down.
It is a small but significant victory for those of us calling for a Robin Hood Tax. France should be congratulated for not only ensuring those with the broadest shoulders bear their fair share of the burden, but for earmarking some money for global priorities that have been knocked so badly off course in the wake of the financial crisis.
Importantly, it’s a precursor for a more wide-ranging FTT covering bonds and derivatives as well as shares that left- and right-of-centre governments, representing 67% of GDP, plan on implementing before 2012 is out.
France, Germany, Spain and Italy are all uniting behind the proposal, the only notable exception is the UK government who’ve compiled a dodgy dossier of bad economics and half-truths to justify their opposition to the tax.
Take for example the infamous ‘Swedish example’ that is often raised by the government and others – credit to the bank lobbyists who have been doing their work here. Sweden implemented an FTT in the 1990s and it was an unmitigated disaster; however, much like holding up a picture of a bike with square wheels, it doesn’t prove the concept of bikes is flawed.
• Robin Hood Tax gains momentum – on the continent 3 Jan 2012
The bittersweet irony is that in the design of the tax at least, France is actually following in the UK’s footsteps. Our 0.5% tax on shares transactions – known as stamp duty and which has existed in one form or another since 1694 – raises the Exchequer a tidy £3 billion a year. There are plenty of other successful FTTs – more than 40 in fact – that exist around the world.
Britain’s grandstanding against plans for a broader European FTT is also largely futile – an FTT implemented by France, Germany and others would still apply to European trades taking place in London, and so we will achieve little more than turning down billions in additional revenue.
These billions could be used to protect the jobs of teachers and nurses, invest in infrastructure to get the economy moving or help meet our commitments to help poor countries cope with climate change.
I’m trying hard to avoid any Olympic analogies here – but left in the blocks, limping along at the back, losing on purpose or throwing a javelin through your own foot would all do for describing the government’s approach to getting the financial sector to pay its fair share.
A recalcitrant Conservative Party can be explained by self-interest – more than half their funding comes from the financial sector. But with momentum now turning a Robin Hood Tax into reality, there is surely an opportunity for the opposition to support an idea that could finally see the financial sector working in the interests of society. For too long it’s been the other way around.