Niall Crowley puts the case for the Financial Transaction Tax
We have the soap up and running. Rebellion has been playing, with mixed reviews, to big audiences. We've already had the first of the pomp and ceremonies in Dublin Castle. Our political leadership got the chance to mix it with the military in all solemnity. We've got that feeling going again, the drug of independence is running in our veins.
But the high never lasts too long. Something will always arrive to spoil it. If it's not multinational tax loopholes, it's Shannon airport and US military aircraft landings.
Now it's being spoiled by the Financial Transaction Tax (FTT) and the demands of the international financial sector. This is the little tax with the big impact that we're not even talking about. A new campaign plans to change this.
In December of last year, 10 Eurozone countries agreed to progress a financial transaction tax on derivatives and shares, including intraday trading, by June of this year. This was agreed by ministers from Germany, France, Italy, Austria, Belgium, Estonia, Greece, Portugal, Slovakia, Slovenia and Spain in the face of significant opposition from the financial services sector.
Ireland was absent and, maybe, not as independent from such opposition as we might have dreamed.
Final agreement has not been reached on the tax rate. The European Commission had proposed a rate of 0.1 percent on share and bond trades and 0.01 percent on derivatives trades. It is a small tax but the yield would be significant. The Nevin Economic Research Institute has estimated a net gain of some €350 million each year to the Irish exchequer were Ireland to introduce such a tax. We can only assume the opposition of the financial sector here must have been intense.
Angela Merkel thinks that financial markets have to contribute their share to the recovery of economies. The IMF says the financial services sector is under-taxed. Michael Noonan must disagree. There is no appetite apparent for taking on the financial services sector, centenary commemorations or no centenary commemorations. Real independence is for soap operas. Trade unions, community organisations, global justice groups, and environmental organisations in Ireland disagree.
On January 26, a coalition of organisations - including Congress - launched a campaign for Ireland to sign up to this Eurozone initiative. The campaign is under the umbrella of Claiming Our Future. They point out that a Financial Transactions Tax would raise important revenue, curb speculative trading and provide a new and important transparency to the financial sector. They are calling it a Robin Hood Tax to capture its essence and to link in with similar campaigns that stretch from France (Robin de Bois) across to the USA and Canada, from Australia up to Britain, and from Denmark (Robin Hood Skat) down to Italy.
A Financial Transaction Tax would not solve all our problems, but it could help with some pressing issues. It could be used to invest in the transitions we need to mitigate and adapt to climate change after the COP21 agreement in Paris. It could assist in meeting the target of reducing poverty by half, that we signed up to in New York under the Sustainable Development Goals. It could reinforce our international support for global equality. It could help repair our badly diminished public services.
The Department of Finance says there is a problem with jobs. The financial services sector would migrate to London. This does not take account of the low level of the tax and the favourable tax conditions provided to foreign companies in the financial sector. It would take more than a tiny tax to get them to give up these attractions. There is no evidence of the financial services sector moving out of the countries that have signed up to the financial transactions tax and have been expressing their intention to do so for four years now. There is no allowance for the jobs to be created by an investment of €350 million.
One hundred years on and we are still struggling with independence. It is a muted struggle behind closed doors, being waged with little enthusiasm. We clearly like the idea but the reality is another matter.
Let's try and change this during 2016.
