EU Parliament backs limited Robin Hood tax

SNP MEP Alyn Smith has today voiced his frustration at a vote in the European Parliament on the Financial Transaction Tax, dubbed the "Robin Hood tax".

The SNP deputies abstained on the grounds that the UK government has opted out of constructive dialogue on the subject so while they do not wish to obstruct, they are not in a position to support the draft plans given major doubts still exist over the workability of the scheme.

Draft plans to implement the tax, designed to work against speculation in financial markets across 11 EU member states, were approved by the EU Parliament. The 11 member states participating in the FTT are France, Germany, Belgium, Austria, Slovenia, Portugal, Greece, Slovakia, Italy, Spain, Estonia.

Due to the UK government [and 15 other member states] refusing to play a constructive role in formulating plans, the proposals cannot take place across the EU as a whole as 'official' EU legislation under the "Community Method" but are instead being taken forward on the more informal legal basis of "Enhanced Co-operation" among those member states who do wish to implement the tax. This makes the proposals far less robust than full EU legislation would be, and major doubts exist as to whether the scheme as proposed would simply encourage tax evasion on an unprecedented scale, raising no revenues but creating perverse incentives.

Alyn said:

"A Financial Transaction Tax that works would change the emphasis on the money markets and swing the pendulum back a little towards us instead of the bankers and speculators. It’s been SNP policy for about 30 years and a proper attempt at it would have our full support.

"It grieves me that here's yet another example of UK government intransigence weakening the EU as a whole. Were the UK to engage with this process and help formulate a plan that was workable then the proposals would be considerably more robust than they now are, but by sitting on the side lines the UK has deprived the process of considerable expertise, fatally weakened the legal base of the plans and, I fear, has doomed the FTT as proposed to failure.

"The SNP want to see an FTT that works, but we're wary too, of the implications for Scotland's vital financial services sector, and the risk that any tax, however well-intentioned, may deliver perverse incentives and drive trade offshore. There is a case for a tax on speculation, but serious questions still exist over the plans as presented, not least where the revenues derived from the tax will end up: with the member states; the European Central Bank; or the EU itself?

"It’s a poor result and yet again the UK government failed us. I can't support measures that haven’t been fully worked out and will not last, and I was stuck not being able to vote for a measure which goes quite a way towards what I believe in.

“I hope the new tax can be worked through properly and we can all get behind it at some point. The UK Government, in particular, should stop sniping from the sidelines and engage to help build a tax that works."