•On Wednesday MEPs voted in favour the Financial Transaction Tax (FTT).
Just to recap the FTT allows the EU to finance itself directly from the taxpayer’s pockets. Needless to say I have been against this from the start and personally tabled a number of amendments against the tax that were unfortunately defeated despite receiving some support from the Tories and few other independents.
Speaking of the Tories I was somewhat disappointed that one of their Members accused me of not caring about the FTT because I didn’t vote against it in Economic and Monetary Affairs Committee. As a member of Budgetary Control, Budget, Economic and Monetary Affairs, Crisis, Sure, and Petitions Committees I cannot be in all places at once, particularly as many Committees meet at the same time on the same time. However, as I pointed out to the Tory MEP in question, I sent a substitute from my political Group to vote for me and this is what happened. My vote, in fact, counted. It is a sad reflection on the Conservatives that they sought to attack the only MEP who has been against the Tax from the start and who tabled amendments to have it blocked.
For the record you can find my speech and the Tory intervention and my response here.
That aside, let us get back to the matter in hand:
We cannot think that giving the EU tax raising powers without normal democratic scrutiny is acceptable. It is not. No amount of carrot waving in the form of contribution cuts can change this. I am completely against the EU having tax raising powers. It would prevent member states from calling the EU’s huge and costly bureaucracy to account: an EU budget without any checks and balances in place does not bear thinking about.
In addition, the legal argument on which the European Parliament is trying to base the establishment of the FTT is incorrect: there is no competition issue around the financial sector in Europe.
The different sizes of the financial industry in some Member States is not an indication of distorted competition, but rather due to historic developmental differences. This should never have been interpreted as a reason for tax harmonisation.
Furthermore the European Commission proposes to tax both sides of the transaction and when one of the parties is not a signatory to the treaty then the other party would raise both amounts.
What would then happen to the UK veto? It would be useless.
The UK taxpayer would end up paying the tax for all transactions that involve member states who have signed the treaty, however, it would not enjoy the reduction on the EU contribution as it has not signed up to it.
It’s a double slap in the face for Cameron and Osborne.
Of course the European Parliament and the Commission must know that the financial sector could move to other more tax-friendly locations. But they feel the EU can afford the loss of this very important industry. It cannot.