Financial leaders in Europe met this week to discuss continuing economic challenges in the region. On the top of the priority list was whether to move ahead with a proposed tax on financial transactions, often referred to as the Robin Hood Tax. The tax grew out of concerns about future bailouts following the 2008-2009 banking crisis in the European Union.
The crux of the European proposal is the imposition of a tax of 0.1% on stock and bond trades and a tax of 0.01% on derivatives. While details have not yet been hammered out, including where the products would be taxed (where sold, where purchased or both?), initial estimates suggest that the tax would bring in 31 billion euros ($42.62 billion US) annually.
Members of 11 EU states have formed a coalition to push the tax forward. Those countries are Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia. Germany and France, the EU’s largest economies, are among the strongest supporters of the measure.
Missing from the list of supporters? The UK. Britain remains staunchly opposed to the tax. London is considered the EU’s single most important banking center and there is considerable worry the tax would undermine the nation’s economy.
British backing will, of course, be key if the measure goes to a vote. That vote is expected to happen in May of 2014. If the measure hasn’t been pushed through by then, protocol would delay the tax until 2015. It’s a pretty tight timeline and so far, there’s not been a lot of angling for public support.
Cue wildly popular British actors and filmmakers. Celebrities in the UK worked together on a short film released today in support of the financial transaction tax. The three minute film is designed to influence negotiations:
The short, entitled Future News was directed by David Yates. Yates is best known for directing the last four Harry Potter Films (in reverse chronological order): Harry Potter and the Deathly Hallows: Part 2; Harry Potter and the Deathly Hallows: Part 1; Harry Potter and the Half-Blood Prince; and Harry Potter and the Order of the Phoenix. He said, about the film, “I agreed to direct the film because the Robin Hood Tax is a simple yet brilliant idea. We need to learn the lessons of the financial crisis and ensure that banks and hedge funds work in the interests of society not the other way around.”
The film is set 10 years in the future. In the short, Andrew Lincoln, star zombie-fighter on the hit AMC TV show The Walking Dead, anchors a newscast looking back at the impact of the tax. Bankers from three countries which currently support the tax, Spain, Germany, and France, are interviewed about the positive impact the tax has made overall. Spain is represented by Javier Cámara, star of Pedro Almodóvar’s films Talk to Her and Bad Education; France is represented by actress Clémence Poésy, who played Fleur Delacour in the Harry Potter films and did a recurring stint on the TV show, Gossip Girl, and Heike Makatsch, known best as the scheming Mia inLove, Actually.
The lone hold out, a Brit, stammers over his country’s failure to support the measure. That part is played by Bill Nighy who played the deliciously pathetic Billy Mack in Love Actually; Davy Jones in the Pirates of the Caribbeanmovies and as Douglas Ainslie in The Best Exotic Marigold Hotel franchise. In contrast to his character in the short film, Nighy said, alluding to Britain’s role in the tax:
Four years after the launch of the Robin Hood Tax campaign, this tiny tax that could do so much good is on the verge of becoming a reality. France, Germany and nine other European countries are about to introduce it. It would be deeply regrettable if the rest of the world were caught on the wrong side of history.
Makatsch further poked holes at the banking lobby, saying:
European leaders have spent long-enough talking about the Robin Hood Tax. It is now time to get serious, push aside the discredited arguments against the tax from the financial lobby and implement a fair tax which could help millions of people across Europe and in the developing world.
Lincoln and the film’s stars encouraged the public to get behind the measure, noting that there has been “incredible support from people across Europe.” You can show your support by signing onto the 1 Million Strong for the Robin Hood Petition; the petition is sponsored by the international aid agency,Oxfam, which also helped produce the film. The petition has 637,954 signatures as of this writing.
The hope in Europe, of course, is that support for the measure will spill into the United States. The Obama administration isn’t on board with the idea but variations on the tax have made their way into proposed legislation.
In 2011, Rep. Peter A. DeFazio (D-OR) introduced H.R. 3313. The official title of the act was the Wall Street Trading and Speculators Tax Act but it was better known as the Robin Hood Act. Twelve co-sponsors in the House signed onto the bill but it was referred to the House Committee on Ways and Means more than two years ago (a euphemism for “it died”). Rep. DeFazio tried again in 2013. H.R.880 was introduced about a year ago, again as the Wall Street Trading and Speculators Tax Act. It garnered 25 co-sponsors before again being relegated to sit it out at the House Committee on Ways and Means.
Similar proposals have been raised by Sen. Tom Harkin (D-IA) and Rep. Keith Ellison (D-MN).
None of the proposals for a Robin Hood tax in the U.S. have made much inroads despite indications that there might be public support. A January 2013 poll conducted by Hart Research for Americans for Tax Fairnessconcluded that 62% of Americans approved of a “small tax on all stock/bond/market trades.”
Sarah Anderson, Institute for Policy Studies (IPS) Global Economy Project Director, said about the newest push, “We’ve had the people on our side for some time now. Having major cultural figures join the fight will greatly increase our chances of overcoming Wall Street’s opposition.” The IPS has been a firm advocate of efforts to advance a transaction tax. In 2012, the group helped organize a support letter signed by more than 50 financial professionals, including former executives from Goldman Sachs, JP Morgan, Progressive Insurance, AXA Investment Managers and NYSE Euronext.
Critics of the bill claim that more taxes will hurt, not help, the economy, which is still fragile after the banking crisis. Opponents also cite the potential cost of the bill to consumers since taxes will surely be passed along in the form of costs.
Realistically, some form of a transaction tax will eventually be implemented Europe. If it doesn’t pass this year, pressure will mount to pass something in 2015 – if for no other reason than Germany is growing weary of bailing out its neighbors. Whether that will translate into real pressure to pass something similar in the U.S. is another story: that may require a level of magic that not even Harry Potter could muster.
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