Thanks mostly to the superb campaigning by international development, poverty and environmental activists, there's been remarkable progress in getting Europe to introduce financial transactions taxes, a.k.a. the Robin Hood Tax. Last month, the European Commission presented a proposal for a broad-based financial transactions tax in all 27 members states of the European Union.
At a rate of 0.1 per cent tax on transactions of stocks and bonds and 0.01 per cent on derivatives, they estimate it could raise 57 billion Euros (~$80 billion C$) a year. In the press release, it is noted that the financial sector enjoys a major tax advantage because of exemption from value added taxes, a point highlighted in the Fair Shares report published last April by the CCPA about how banks and the financial sector can pay fairer taxes in Canada.
There are concerns with their proposal from proponents: some in terms of the initial proposed design and also for not dedicating funds to international development and climate change, but this endorsement from the largest economy in the world is still a major step forward.
At the same time, transactions taxes would be much more effective if they were agreed upon at a global level, which is why the European Commission and Germany announced ten days ago they would join France in trying to achieve agreement at next months' G20 meeting in Cannes. As soon as this was announced, Canada's finance minister Flaherty told a Wall St audience he would once again marshal opposition to stonewall it.
It's hypocritical of Flaherty and his ideological allies to oppose financial transactions taxes at the same time that they lecture European countries to reduce their deficits -- unless of course they want this deficit reduction to come only through spending cuts and certainly not through taxes on business or finance. It's absolutely wrong of Flaherty to say a transactions tax makes no sense in economic terms and that a 0.1 per cent and 0.01 per cent tax on financial transactions would counteract financial stability reforms.
From Keynes on, many economists have advocated financial transactions taxes precisely because they would increase economic stability, including Nobel prize winners James Tobin, Joseph Stiglitz, Paul Krugman and over a thousand other economists who signed onto a letter last spring.
In advance of the G20 Finance Ministers in Paris and the spreading of the Occupy wall Street protests into Canada this weekend, the Toronto Star published an opinion piece I wrote criticizing Flaherty about this in their paper yesterday: "Don't just occupy Wall Street, tax it."
This article was first posted on The Progressive Economics Forum.
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