At the Sarkozy-Merkel mini-summit on16 August, held to enable the French and German leaders to discuss the future of the eurozone, one of the concrete proposals that emerged was the idea of a Tobin, or ‘Robin Hood’, tax.
Sniffing a financial opportunity, Jose Manuel Barroso was on 29 September quick to reiterate the Commission’s desire to see such a tax introduced.
There is clearly a growing momentum among the EU elite to impose levies on financial transactions, a portion of which will be diverted to EU coffers. But beyond the debate concerning the efficacy or otherwise of this proposed measure, there are two other questions that need to be addressed.
First, should a Tobin tax be applied to the non-Eurozone member countries - Britain, Denmark and Sweden - as Brussels is demanding, even if the elected representatives of these countries do not want it?
And second, does it necessarily follow, should it be introduced, that a proportion of the money raised be handed over to the coffers of the European Commission, rather than for it all to go to hard-pressed national treasuries at a time of public sector cuts and tax hikes?
EU waste
Those, like the Robin Hood Tax campaign, who support this proposal in the abstract should think twice about the Sarkozy-Merkel proposal in particular. Do they really want more cash to be directed towards an organisation notorious for fraud and waste, excessively high wages and whose budget has not been cleared by the Court of Auditors for the past 16 years?
Is it right, for example, that Peter Mandelson is still drawing 50% of his annual Commission salary of £180,000 three years after leaving office in Brussels? Lord Mandelson is taxed at the EU ‘community rate’ of 26% on his earnings - why doesn’t he pay the full rate of either UK or, alternatively, Belgian taxation?
Or do the peoples of Europe really believe it is appropriate that money raised in their countries should be used to heavily subsidise the privileged, private education of the offspring of the Brussels Nomenklatura in their special European Schools?
EU fundraising
The French and German leaders in making their Tobin tax demand were in fact adding their weighty support to a proposal the Commission has long been making.
Brussels desperately wants to find new ways to raise an increasing proportion of its ever-expanding budget through taxes levied against the individual citizens of the member countries. In this way the EU elite will be able to replace national contributions with so-called ‘own resources’.
Once enough streams of direct taxation are in place, Brussels could by-pass all the tedious arm-twisting of the member state governments it currently has to undertake and just keep ramping up the levies European citizens individually have to pay.
The Commission estimates that it could raise between 31 and 50 billion euros every year on the basis of just a 0.1% tax on stocks, bonds and derivatives.
Merkel and Sarkozy are also concerned about how on earth the EU is going to be able to prevent the Eurozone from collapsing, especially since the German government is adamant that the idea of Eurobonds - whereby northern Europe would become responsible for the debts run up Greece, Ireland, Portugal, Spain, Italy and others - is a complete non-starter.
Understandably, Angela Merkel does not want to stand for re-election in 2013 on a policy of having incorporated the German people into a permanent European debt union.
The idea of a Tobin tax, together with other ideas floated by the Commission - such as taxes on air travel, emissions-trading and the sending of emails - is much more attractive to the German chancellor because these would also be directed at citizens from Britain and the other non-Eurozone countries, as well as those from the states inside the single currency.
These new planned euro taxes are therefore a way of making three important net donor countries responsible for the cost of helping to maintain the dysfunctional euro system they have opted to stay outside of.
Cameron's challenge
David Cameron will no doubt claim that the Tobin tax and other measures cannot be applied to the UK as we will have a veto over the next tranche of powers Brussels is seeking to gain.
In the near future, the EU will attempt to re-define Article 136 of the treaty in order to help it establish ‘central economic governance’. On top of this, there might even be a new treaty.
However, it must not be forgotten that our government thought it was exempt from having to contribute to the Eurozone bail-outs and was forced under Article 122 of the Lisbon treaty to hand over £12.5 billion towards helping Ireland and Portugal. We are tied into doing this for another two years.
John Major also believed he had negotiated certain opt-outs concerning the Maestricht treaty only to discover that they were worthless once the EU had got Britain to ratify the document.
At the end of the day, it will be the Eurozone majority within the EU, backed up by the European Court of Justice, that will have the final say in interpreting what our legal obligations and exemptions are, and are not, under an elastic EU treaty open to an infinite range of interpretations.
It should be for the elected and accountable national parliaments throughout Europe to decide if they do, or do not, want a Tobin tax following rigorous debate about the pros and cons of this policy.
If it is introduced, the amount raised by hitting the bankers in this way should go exclusively to, and be spent by, those who are democratically accountable. Not remote EU figures who cannot be removed from office by the voters of the member countries.
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written by Marc Glendening
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