A financial transaction tax - Why doesn’t Ireland join THIS Group of 10?

BY NIALL CROWLEY

Imagine a campaign for more taxes. Perfectly justified when you consider what could be done to address poverty, public services, climate change, and global justice with the money. 

However, in the Irish context, it would come as a surprise after all we have been through to know our Government does not support a relatively small tax on the financial services sector. 

That’s what’s happening here. The Robin Hood Tax Campaign has just been launched, under the umbrella of Claiming Our Future. Over 40 national civil society groups are signed up to it. Not just Government, but most political parties, however, are failing to get behind the demand being made. People before Profit are up for it and so are the Green Party. Silence from the rest. 

How come political parties are saying no to what would be a windfall of €350 million per year?

This is no ordinary tax that is being demanded. It is a tax that would seek redress for the role of the financial sector in the economic crisis, the cost of the bailouts in the sector, and the fact this sector continues to be under-taxed. This is the Financial Transactions Tax (FTT). 

It is a tax being promoted by international radicals such as Angela Merkel and Bill Gates. However, our own national radical, Michael Noonan, is holding out against it.

The Financial Transactions Tax would be a tax of less than point one per cent on trading in bonds, shares, derivatives and credit default swaps. It is, therefore, a little tax. However, in Ireland these transactions are worth billions of euro every year. 

The Nevin Economic Research Institute has estimated that a Financial Transactions Tax would raise €638 million per year. The introduction of the tax would involve abolishing stamp duty. So they estimate that the net tax increase would be between €320m and €360m per annum. Still the Government are saying no. You can only wonder at the power of the financial services sector.

The Robin Hood Tax campaign is global at this stage. There is more information about the work in Ireland at www.robinhoodtax.ie 

You can even get to sign up to support for campaign and build the demand for an Irish Financial Transactions Tax.

The campaign is making real progress at a European level. Ten countries are involved in what is called an Enhanced Cooperation Procedure to bring forward an agreed approach to implementing a Financial Transactions Tax. These are Germany, France, Italy, Austria, Belgium, Greece, Portugal, Slovakia, Slovenia and Spain. 

In December, they agreed the Financial Transactions Tax would cover shares, derivatives and corporate bonds. It will not cover sovereign bonds which is important for countries, like Ireland, with large debt problems.

Ireland refused

They are aiming to agree all the final details by June 2016. After that a European Directive will be published covering the 10 countries and each of the 10 countries will then introduce its own legislation. Ireland has refused to participate in this process.

The Financial Transactions Tax will raise between €10bn and €20bn for the 10 countries involved. They know it will boost their capacity to invest in poverty, public services, climate change and global justice issues. They understand that the tax will increase transparency in the financial sector and reduce speculative trading. They see that this sector is not paying its way towards the economic recovery of the euro zone. For some reason the Irish Government doesn’t.

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 also no evidence of the financial services sector moving out of the 10 countries that are signing up for the Financial Transactions Tax and have been expressing their intention to do so for four years now. The Department of Finance makes no allowance for the jobs that would be created by an investment of €350 million.

There is an opportunity to be seized. There is a leadership coming from these 10 EU Member States that is useful. There is hostility from the Irish Government that is extraordinary. 

We need to see a commitment to Ireland joining the Enhanced Cooperation Procedure for a Financial Transactions Tax in the next Programme for Government. We need to see this commitment linked to further investment in poverty, public services, climate change and global justice issues.

Right2Change supports a Financial Transaction Tax. See a list of candidates who support Right2Change here.