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The UK is set to miss out on billions of pounds of public spending as other countries in Europe push ahead with a Financial Transaction Tax (FTT) leaving David Cameron sidelined.
Cameron said for the first time two weeks ago that he would veto the FTT if it wasn't implemented globally.
But the instigation of a FTT now appears closer than ever with France and Germany resolving to fast-track implementation by the end of 2012. Italy is also now in support as are the large majority of European countries (25 out of 27) with only the UK and Sweden opposed.
In September, the European Commission suggested a tax of 0.1 per cent on equity and bond transactions, and 0.01 per cent on derivatives, which it said could raise 55 billion euros ($71 billion) a year.
FTT has become a key issue for Merkel and Sarkozy who are now expending political capital to drive it forward. They have both publicly endorsed the use of FTT revenues in part to finance development and climate finance, but also with large revenues coming to their own countries for other purposes.
Neither Merkel nor Sarkozy support the use of revenues to finance the European Commission budget. The proposal is that FTT revenues will be raised nationally and spent at the discretion of each government.
The UK, a long with a few others, has blocked the moving forward of an EU-27 FTT. So the most likely route is for the Eurozone, or a Eurozone Plus to agree a FTT. This would mean revenue is collected nationally by participating countries and would not go to Brussels.
The UK Government has toughened its stance against a FTT even though public anger remains high as banks return to business as usual. The full weight of the financial lobby is also being deployed to denigrate the tax and to falsely link it to financing ‘Brussels bureaucrats’.
Support for the FTT though now extends way beyond Europe, including figures such as Bill Gates and a new 'coalition of the willing' taking in Brazil and South Africa for the first time alongside Argentina, France, Germany, Spain, the European Commission and others.
Even the US is softening its stance thanks to Occupy protests, FTT campaigning and looming election, creating opportunities on both sides of the Atlantic.
A huge hat-tip to Max Lawson, head of policy and advocacy at Oxfam and Simon Chouffot from the Robin Hood Tax campaign for the information aboveTweet