A Breakthrough on Financial Transaction Tax, But Still a Long Way to Go
A decision by 11 European countries to implement a Financial Transaction Tax (FTT, also known as the “Robin Hood Tax”) constitutes an important victory for tax justice campaigners. Austria, Belgium, Estonia, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain could start collecting a 0.1% tax on trades in stocks and bonds and a 0.01% tax on derivatives trades as early as January, 1, 2014.
While campaigners have called for substantial portions of the revenue collected to be dedicated to fighting global poverty, climate change and diseases such as HIV/AIDS, there is no agreement yet on how the revenue will be spent. France has indicated a willingness to see up to 10% of the revenue be devoted to overseas development assistance. The European Union’s commissioner for taxation has indicated that substantial revenues are likely to go to assisting heavily indebted eurozone countries.
Estimates of how much revenue might be raised vary widely. France has suggested that the 11 countries might collect €10 billion (C$13.6 billion ) a year, while a German research institute says the amount could be as high as €37 billion (C$50 billion) annually. The European Commission has said that if the tax were collected by all 27 EU member countries the revenue could be as high as €75 billion (C$102 billion) a year.
While this FTT will, for the time being, only apply to transactions where a resident of one of the 11 countries is involved, the precedent it sets will put pressure on other jurisdictions. The Netherlands, Sweden, Hungary and Romania are considering joining the other 11 EU members. But Britain remains opposed to any new FTT despite the fact it already imposes a tax on stock purchases. Soon Canada and the United States will have to reconsider their opposition to any kind of a transaction tax.
KAIROS has joined with partners in the international ecumenical community in calling for a global FTT with the revenues managed by a democratically representative agency to use the proceeds for the eradication of poverty and disease and cover the costs of climate change mitigation and adaptation incurred by low-income countries.