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Friday, 9 December 2011

Transaction tax question

If there was an EU-wide transactions tax, the money would be collected and retained by national governments, right? Calling it EU-wide, etc, leaves open the inference that money collected in France, the UK or Portugal would not go into the national coffers in Paris, London or Lisbon, but would instead go to Brussels, to be spent by the EU on straightening bananas, banning sausages and rigging the Eurovision Song Contest. And that inference is mistaken, right? The money raised on transactions in the City of London would actually go to the British Treasury? My perception of the issues at stake on this has been clouded by what I believe is a mistaken inference - a mistaken inference that has loomed large in much media coverage of the issue.

I don't know whether or not a Tobin tax or other transaction tax is a good idea. That is a technical area of taxation about which I know not much. I do know that I would not especially favour a transactions tax that was cobbled together in the middle of the night at a summit that's supposed to be about resolving the eurozone's sovereign debt crisis. In what other field is it considered sensible to sit up all night arguing in an atmosphere of crisis?

As a Liberal Democrat, I agree with Deputy Prime Minister Nick Clegg ( that David Cameron had no choice but to use the veto, although I note that Mr Clegg has further developed his thoughts on this matter since I first wrote this post ( I think it was the right decision, given the political circumstances in which Mr Cameron appears to have found himself. Lord (Matthew) Oakeshott is mistaken to link this to the Conservatives' not being part of the centre-right European People's Party (EPP). I too opposed the Tories' decision to move from the EPP to another grouping that is to the EPP's right and which includes some highly dodgy right-wing parties. But that's got nothing to with this week's crisis. If Nick Clegg was Prime Minister, he wouldn't be in the EPP with Merkel and Sarkozy either - he'd instead be in the European Liberal group, just as Ed Miliband would be in the Socialist group. Mr Cameron's perfectly good relations with the French and German leaders has nothing to do with the Tories having left the EPP.

Also, if one of the things that we were reportedly seeking at this summit was the right for the UK Government "to strengthen UK banks' capital ratios in line with the Vickers commission report", then the UK is surely arguing for more (not less) regulation of British banks, so how can Chris Davies MEP accuse Mr Cameron of using the veto "to protect bankers from regulation"? What Mr Cameron was actually doing was maintaining the UK's ability to impose tough measures on banks.

Do some Lib Dems wrongly think that our party's pro-European history means that we are uncritical of all European institutions and would never sanction the use of Britain's veto? The Liberals called for the UK to join the Common Market before any other party. The SDP's founders included pro-European Labour rebels at a time when Labour wanted to pull Britain out of the EEC. We therefore have a proud history of believing that the UK gains a lot from being in the EU (which it does). That doesn't, however, mean that we will always agree with all of the other countries that are in the EU. It's not anti-European to say No sometimes, and if we're supposed never to use our veto, then why do we have a veto in the first place?

What Nick Clegg is saying today is consistent with what he was saying as long ago as July:

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