In a recent publication, The Case for a Financial Transaction Tax, the Irish Congress of Trade Unions made a well-argued call for a tax on financial transactions such as stock trading and derivatives trading. There is, in fact, a growing push across Europe, and not just from the Left, for a tax on this multi-billion-Euro sector of the economy. As ICTU point out, this tax could raise a staggering €57 billion across Europe. And this would be at the infinitesimal rate of 0.01% to 0.1%; a moderate tax that would do little to hamper an industry which already escapes from paying VAT.
Indeed, one of the most remarkable things about this idea, is how absolutely timid a reform it is. James Tobin, one of the first people to propose this tax, sometimes also called a Tobin Tax, suggested a rate of somewhere around a half of one percent. The British charity Stamp Out Poverty have gone even further, and calls for a tax on sterling currency transactions of 0.005%; even that would raise, in Britain, somewhere in the region of USD$2Billion.
In our pre-budget submission, the United Left Alliance has supported the calls for a financial transaction tax. As we point out, even at the tiny rates being proposed, half a billion Euros could be raised in Ireland alone by a Financial Transactions Tax. This money could then easily be used for public works and jobs programmes, for mortgage relief, or for proper funding of our healthcare and education systems.
The Fine Gael/Labour Government, however, has already made it quite clear that it opposes this tax. Michael Noonan, for example, claimed that if such a tax were introduced, the 33,000 people employed in the finance sector in Ireland could lose their jobs. This is totally disingenuous. The low tax rates proposed would do little, if anything, to affect the obscene profits of the shadow-banking sector. It is much more the case that Noonan, Kenny and Gilmore are walking in step with their ideological pals in the House of Commons, where the Con-Dem government has also come out strongly against any measure, no matter how small, to eat into the profits of the City of London. In this, Fine Gael and Labour are now well to the right of both Angela Merkel and Francois Hollande, both of whom have cautiously supported a Tobin Tax.
It speaks volumes about the true interests of the current government that they remain massively opposed to even so moderate a policy as this. Instead they will, this week, propose a budget that will see further cuts to public services, and further increases in a regressive taxation system that already disproportionately hits ordinary working people, whilst turning a blind eye to flagrant tax evasion by the super rich. A Tobin Tax would be a step in the right direction, towards a pro-growth economic policy with job-creation at the centre, and that puts the interests of ordinary people before those of big-business. But even that tiny step would be too much for Minister Noonan.