TUC calls for Chancellor to back European Robin Hood Tax

Robin Hood Tax Campaign

European Finance Ministers' Meeting

6 September 2010

TUC General Secretary Brendan Barber has written to Chancellor of the Exchequer George Osborne, urging him to back a Robin Hood Tax at the EU Finance Ministers' meeting on Tuesday 7 September, part of a lobbying campaign organised by the European Trade Union Confederation, whose General Secretary John Monks has written to the leaders of the European Commission. The Robin Hood Tax campaign wrote to the Chancellor on Friday.

The campaign was featured on Newsnight on 3 September, and the Observer on 5 September.

Brendan Barber's letter to the Chancellor follows, and the Robin Hood Tax campaign letter follows that.

Rt Hon George Osborne MP
Chancellor of the Exchequer
HM Treasury
1 Horse Guards Road
London SW1A 2HQ

Dear George

EU Finance Ministers' Meeting: financial transaction taxes

I understand that Ministers will be discussing financial sector taxation, among other things, at the forthcoming ECOFIN meeting in Brussels on Tuesday 7 September. As a key participant in that meeting, I would urge you to recognise the benefits of a financial transactions tax (FTT) alongside the various proposals for bank levies and resolution funds for future crises.

Workers and their families around Europe are paying a triple bill for a crisis for which they have no responsibility: as job holders facing high and rising unemployment; as taxpayers facing austerity and higher taxes; and as parents facing a bleak economic future for their children. In stark contrast to this, the crisis for banking institutions and their managers seems to be over. The huge bail-out programmes seem to have done nothing to promote more socially responsible behaviour in the banking sector. The TUC believes that a broadly-based FTT would help re-pay the costs of the crisis as well as helping to combat global poverty and climate change.

We are deeply concerned that the Commission non-paper on financial sector taxation dismisses the feasibility of a European transaction tax and rejects the adoption of an FTT on purely ideological grounds. It is drenched in pre-crisis thinking of allegedly efficient financial markets, thinking that led to the current crisis. Such a dogmatic approach runs counter to the EU position at the Toronto G20 Summit and to the majority view in the European Parliament.

Regrettably, the same judgement applies to the draft EU terms of reference for the Seoul G20 Summit. These express concern at the cumulative effects of regulation and tax burden for the banking sector and suggest only a further analysis of FTTs - an unacceptable reversal of the concept of fair burden sharing.

The TUC strongly believes that we need a European FTT that raises money to finance recovery and tackles speculation and volatility. By discouraging socially useless short term trading, the FTT would help bring the financial sector back into line with the real economy. The EU institutions must not dismiss FTT at the outset. I hope that you will support an FTT at the ECOFIN meeting tomorrow.

Yours sincerely

BRENDAN BARBER

General Secretary

Robin Hood Tax campaign letter

Dear Chancellor,

Re: Extraordinary ECOFIN discussions on taxing the financial sector, September 7th

We very much welcome the fact that taxing the financial sector will be at the top of the agenda for the forthcoming ECOFIN meeting. The Robin Hood Tax Campaign, and our hundreds of thousands of supporters, hope that you use this opportunity to work with other Member States to ensure the UK and Europe continue to lead in setting a global approach to introducing taxes on financial institutions to support action to address poverty in the UK and fight poverty and climate change in developing countries. We are paying close attention to the results of the ECOFIN meeting.

The UK bank levy announced in your Emergency Budget fell short of Civil Society's expectations for a fair and substantial financial sector tax. However, we have been encouraged by indications that the UK government is prepared to go further by implementing a Financial Activities Tax (FAT) which we believe, combined with other measures, could raise as much as £20 billion a year in the UK. We hope that the ECOFIN meeting will provide a platform for taking this forward at the European level.

Ultimately, we believe that a Financial Transaction Tax (FTT) has the greatest potential to raise revenue from the financial sector, as it offers a robust, simple to implement and fair mechanism. We are encouraged that there is currently momentum to take this forward at the European level. While we are aware that this is not the UK Government's preferred method of taxing the financial sector, we hope that as these discussions are in the early stages and it is not yet clear exactly what form the FTT will take, that the UK government will not block these efforts and will support other Member States in seeking Europe-wide consensus to implement such a tax. As has already been recognised by the G20 and the EC, whilst global agreement is preferable, it is legally, technically and economically possible for the EU to move alone on an additional tax.

We also hope that you will follow Commissioner Barnier and several EU Heads of States in stressing that the revenue of the tax should not only be used to pay for the cost of the crisis and future bank bail outs but also to fight poverty at home and abroad and contribute to fighting climate change. A recent Oxfam report shows that the financial crises caused by banks in the North have severely affected developing countries and left them with a $65bn deficit. More than $100bn a year will also be needed to help them fight climate change.

Bold and ambitious financial sector taxes make economic sense as the sector has returned to considerable profitability and can afford to pay more. But as VAT rises on the public begin to take effect, such taxes would also indicate that the financial sector will be made to pay a fair contribution to reducing the deficit and securing the lives of the poorest at home and abroad. The Robin Hood Tax coalition would be disappointed if the UK government was not working towards the following specific results at the ECOFIN meeting:

• Agreement to pursue ambitious financial sector taxes that are capable of raising tens of billions a year;
• Promotion of the FAT as a viable mechanism for achieving this;
• Agreement not to block European FTT efforts but to support other member states, accepting that it is possible for the EU to move unilaterally; support international FTT efforts; and work towards placing the issue on the table at the next G8-20 in Korea;
• A clear statement that revenues raised by any tax on the financial sector will go towards funding global public goods, including development and climate change, as well as fighting poverty at home.

We also encourage you to continue pursuing a discussion in the G20 and other international fora, including the Leading Group on Innovative Financing for Development, the UNFCCC and the UNSG's Advisory Group on Climate Finance (AGF), on a broader international approach to financial sector taxes, recognising that leading by example is an important step in achieving an internationally coordinated approach.

Yours sincerely

David Hillman

Stamp Out Poverty Coordinator, on behalf of the Robin Hood Tax campaign

http://www.oxfam.org/en/policy/impact-global-financial-crisis-budgets-low-income-countries