Does Lucy Powell support the Robin Hood Tax or the European Union?

Lucy Powell, the Labour Prospective Parliamentary Candidate for Manchester, is proud to be associated with the the Robin Hood Tax Campaign.  You will find Ms Powell proudly proclaiming this on her website, with pictures of her next to Glenys Kinnock and Arlene McCarthy MEP. Ms Powell also got a splash in the local South Manchester Reporter on 19th March 2010 campaigning on the very subject.

However, on the 1st April, the EU published a Commission Staff Working Document “Innovative Financing at a Global Level”, SEC(2010) 409 final. Before you yawn and drop to sleep, on the subject of Financial transactions Taxes it says

At least for a levy on currency transactions some legal aspects have to be considered. In relation to the original proposal by Tobin for a currency transactions tax legal obstacles were put forward by the ECB on its compatibility with the free movement of capital and payments between Member States and between Member States and third countries under Article 63 of the Treaty on the Functioning of the European Union (TFEU) (ex Article 56 of the Treaty Establishing the European Community (TEC)).45 Since the mechanism of a currency transactions levy is supposed to be based on taxing the net position of foreign exchange transactions, it could represent a restriction of the free movement of capital and payments (Article 63 TFEU). Besides the effect on the netting operation itself, it indirectly restricts underlying transactions, including those between Member States and with third countries, by rendering them more costly. It is unlikely that, for this restriction, a justification sufficient for the purposes of the Treaty could be found. Even if e.g. raising funds to benefit stability funding were to be considered as an overriding requirement of general interest, that requirement could not explain why transactions involving countries with different currencies would be treated less favourably than those involving only one currency. Furthermore, the tax is considered to be disproportionate as funds could alternatively be raised by other means of budget attribution without affecting a basic freedom of the Treaty and, in any event, because the scope of the tax would be unrelated to the risks to be covered by the tax revenue raised. Even a very low tax rate would constitute an infringement, and it would not be possible to establish a threshold of insignificance.

Which translated into simple English means that a Robin Hood Tax is illegal under European Law.

So a simple question for Ms Powell.

Do you, Ms Powell, as Labour PPC for Manchester Withington support

a) The Robin Hood Tax?

OR

 b) The Labour Party’s Policy on support for the European Union?

I think that the voters have a right to know before May 6th

Leave a comment

2 Comments

  1. BW

     /  21/04/2010

    Aside from the fact that it is illegal, a Robin Hood tax has been sold to the public in a very misleading way. Banks would benefit from a Robin Hood tax due to a reduction in competition as market liquidity providers would be put out of business. Costs would simply be passed on to the financial consumer. Pensioners, savers, investors, farmers and other commercial hedgers would be most hard hit.

    In summary, another stealth tax that hits the poor the hardest…haven’t we seen enough of those?

    When they introduced a financial transaction tax in Sweden from 1984-1991 the results were disastrous and the tax actually generated negative tax revenues! The tax take was tiny due to a 95% collapse in trading volumes and the reduction in capital gains tax revenue was even larger.

    It was also seen in Sweden that the reduction in liquidity in bond markets increased the cost of financing the national debt. It would be madness to increase the cost of funding the UK’s national borrowing when our national debt has recently doubled. The result would be higher taxes for all.

    Reply
    • manicbeancounter

       /  21/04/2010

      If the fall in trading volumes was so substantial in Sweden, think of the impact on a European-wide tax on London. Much of the trading volumes would shift to New York, Tokyo, Zurich and Singapore.
      Yet almost all the economic growth since 2000 can be accounted for by government spending or financial services.

      Reply

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