Connected Research

Union policy research in the 21st century

Robin Hood goes to Strasbourg

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The European Parliament yesterday debated a financial transactions tax via an oral question put up by Sharon Bowles, a Liberal Democrat MEP who chairs the Parliament’s Economic and Monetary Affairs Committee, followed by a debate on a formal motion.

The motion was, essentially, a shoo-in (the vote is scheduled for tomorrow), since it is supported by the four largest party groupings in the Parliament, including the Socialists & Democrats; the Greens – European Free Alliance; Liberals and Democrats; and the centre-right European People’s Party (which excludes those parties which are further to the right, including the UK Tories). Between them, these four party groupings control something like 80% of MEPs. Conssequently, such a wide cross-party consensus on the motion for debate adds tremendously to the power of what it calls for.

[Edit 11 March: the resolution was approved with 536 votes in favour – 87% of those voting.]

The motion recalls:

The importance of renewing the economic and social contract between financial institutions and the society they serve,

and seeks to remind G20 leaders of their:

Collective responsibility to mitigate the social impact of the crisis, both in their member states and in developing countries, which have been hard-hit by the indirect effects of the crisis.

The motion identifies the European Parliament behind the EU having its own strategy on a financial transactions tax to take to G20 summit meetings, and for the need to adopt a common position at the G20 on the issue based on:

The options as to how the financial sector should make a fair and substantial contribution towards paying for any burden which it has caused to the real economy or which is associated with government interventions to stabilise the banking system.

(Here, the motion cleverly borrows from the leaders’ declaration from the G20 meeting Pittsburgh last September – see point 16.) In moving towards the definition of such a common position, the motion urges the Commission to elaborate an impact assessment of the potential of a global financial transactions tax both to generate revenues as well as to stabilise markets (here, in particular, the oral question correctly approaches the issue from the perspective of assisting with the development of a much needed long-term orientation to the financial system); of the benefits and drawbacks of such a tax; and of the need for the tax to be sufficiently well designed to mitigate any side-effects.

The motion has been well thought-out and put together, and its powerful language belies the political disparities between the political groupings uniting behind the motion (where the product of establishing such a wide-ranging consensus is frequently anaemic language and commitments). Ultimately, it will provide a further contribution to the body of evidence, on top of that currently being put together by the G20, on what such a tax could look like, and achieve, and is to be welcomed. In this respect, it’s also a good sign of the value of MEPs and the work they do.

Clearly, it does not yet commit the EU to a policy on the tax; it simply asks the EU to investigate the case. Nevertheless, should the impact assessment come out favourably in support of a financial transactions tax, that will give greater power to the elbows of those arguing that the EU should adopt such a tax and would represent a significant, valuable and high profile breakthrough for financial transactions tax campaigners.

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Written by Calvin

09/03/2010 at 4:40 pm

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