Europe moves to a financial transactions tax — will we follow?

Eleven countries made the decision to introduce a tax on financial transactions yesterday. Simon Chouffot argues we should take heed.

Just as David Cameron appeared to be grabbing his coat for an EU exit, other European countries took a step towards greater unity with agreement for eleven countries to implement a multi-billion pound tax on the banks.

Not tax rises on low income families, or cuts to public services to balance the books, but a tax on banks. It's not every day you get to write that. The eleven hope that the Financial Transaction Tax of between 0.1-0.01 per cent on stocks, bonds and derivatives could be implemented as early as next year and will raise around £30bn.

The FTT has for years stirred controversy. Banks, following the Mayan's lead, warned that the end of the world was nigh. As campaigners for a Robin Hood Tax we have often been told "you may have a nice video with Bill Nighy in it, but your idea won't wash in the complex world of finance, nor will it cut it at the coalface of Government."

Yet it has – Europe's biggest economies including France, Germany, Italy and Spain are signed up. The group of eleven makes up an impressive 90 percent of Eurozone GDP. Other European nations agreed to let them press ahead. Yet there was one notable abstention, from the UK Government.

Why? It could be argued that a right of centre Government, a powerful financial sector and an economy struggling to return to growth would never add up to much of an appetite to take a chunk out of the banks. Yet all of this applies to Germany, one of the FTT's biggest champions.

The difference is that Germany sees the FTT as a necessary part of the economic equation. It too is implementing tough austerity measures. Germany understands the need to balance and indeed improve the economy by ensuring the financial sector pays its fair share. The richest sector in the world, paying a modest additional tax for causing the largest financial crisis of a generation: quid pro quo.

As Wolfgang Schauble, German finance minister said:

It’s in the interest of the financial sector itself that it should concentrate more on its proper role of financing the real economy and ensuring that capital is allocated in the most intelligent way, instead of banks conducting the bulk of their trading on their own account. That’s in the long-term interest of the financial sector.

Cameron, conversely, opted to call the Financial Transaction Tax "madness", fighting hammer and tong to protect the hallowed elite in the City, whilst cutting benefits and services for the poorest. The Government's much touted bank levy, will raise a just £2.5bn a year and be offset by a lowering of Corporation Tax that Osborne has boasted will be the lowest of any major western economy.

Mervyn King, Governor of the Bank of England pointed out the irony that "the price of the financial crisis is being borne by people who did absolutely nothing to cause it", adding that he was "surprised that the degree of public anger has not been greater than it has".

But if the moral argument doesn't sway you, then the fiscal case should. Leading City figure Avinash Persaud has calculated that if the UK were to join in with the European Financial Transaction Tax it would raise the Exchequer at least £8bn a year. This could lift over three million people struggling on minimum pay above the living wage threshold.

Ten thousand teachers lost their jobs in 2010/2011 and there are 5,780 fewer nurses than at the time of the last general election – in eleven days an FTT could raise enough revenue to re-employ every one. In just a single day the tax could raise enough money to reinstate Sure Start centres for 25,000 children.

EU tax chief Algirdas Semeta described the FTT agreement as a “major milestone” that can “pave the way for others to do the same." The door has been left open and we should continue to press the UK Government to walk through it. The Labour Party wanted cover to fully back this tax – they now have it.

But this doesn’t have to be another case of Britain versus Europe. The UK has already got an FTT on share transactions – stamp duty – that raises some £3bn a year for the Exchequer without driving business away. Extending this to bonds and derivatives is not a dramatic leap and surely one that makes moral and financial sense.

As Cameron distances himself from Europe this is one item we should be reminding him is still on the agenda.

Demonstrators dressed as Robin Hood make their way down the Chicago River. Photograph: Getty Images

Simon Chouffot is a spokesperson for the Robin Hood Tax campaign and writes on the role of the financial sector in our society.

Photo: Getty
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I’m in the kitchen with my children, finally learning how to sharpen a knife

For some reason, they have often given me sharp things as presents.

The children have been with me quite a bit lately: they are all going to be, by the time you read this, on their travels, and the Hovel is a useful staging-post for the start of their journeys. Staying here means an extra hour in bed when you have to take a coach from Victoria, or a plane from Stansted or, worse, Luton.

Their company never fails to delight, which is not how I imagined things would turn out. I was a surly clock-watcher at my own parents’ home, counting the days until I could cast off the oppressive yoke of having my meals cooked for me and my laundry done. That was how it was back then. Nowadays, parents try to close the gap between themselves and their children or, even if they don’t try, the gap seems to be closing anyway.

I suppose not being in situ for ten years, on the ground doing the daily heavy lifting, helps. I am not the monstrous, Freudian oppressor-figure: I am the messy layabout with a certain weird kind of authority but not one who assumes the moral high ground. But here they are, or were, and as they get older they get increasingly interesting, more pleasing to be with. And the interesting thing is that they now have skills that I can learn. The traffic of instruction is not one-way.

My daughter worked, for a while, in the kitchen of a restaurant in Berlin. She already knew how to cook, and how to get along with people, but there she also learned how to sharpen knives. I thought I could, but I can’t, not at all.

When you see a father – invariably a father – zinging a honing steel along the blade of a knife prior to carving the Sunday roast, he is not doing anything useful apart from establishing a sense of theatre, which is of debatable utility anyway. He might think he’s a cross between Zorro and Anthony Bourdain, the rather cool New York chef – there’s always a certain flourish in the wrist action – but the trained chef will raise an eyebrow.

For some reason my children have often given me sharp things as presents. For my first Christmas in the Hovel they gave me a Swiss Army Knife, which I still use, especially the corkscrew; one birthday they gave me a pizza-cutter in the shape of the original Starship Enterprise – which I still use. And last birthday, the boys clubbed together to get me a proper kitchen knife.

I had hitherto resisted the notion of getting one, despite the fact that I like cooking and also know how important a good knife is. Here is Bourdain himself, writing in his Les Halles Cookbook (the only one I ever use these days): “Your knife, more than any other piece of equipment in the kitchen, is an extension of the self, an expression of your skills, ability, experience, dreams and desires.”

I suppose this was why I put up with rubbish knives for so long: my dreams and desires were second-rate. I was cooking on an electric hob, mostly for myself; besides, I wasn’t going to be here forever. What the hell was I going to do with a decent knife? Also, I have a healthy respect for sharpness, and whenever I cut meat up with a good blade, I imagine that blade cutting into my own weak flesh, and see vividly, the wound it makes.

But a good knife needs to be looked after, and my daughter, who was given a Japanese chef’s knife as a parting gift from her fellow kitchen workers, learned how to use a water stone, and last weekend taught me.

It is fascinating, and soothing, sharpening a knife. You have to gauge the correct angle at which to place the blade against the stone. You have to feel, with the pads of your fingers, the sharpness of the knife itself, and the burr that results on one side of it after a few dozen passes over the stone. One is aware that sharpening is about shaving steel, almost by molecules at a time, a process that has no theoretical end, except when, one day, the knife itself is sharpened to invisibility.

I am reminded of the fabled measure of eternity: the bird who sharpens his beak against the rock of a mile-high mountain once every hundred years. When the mountain is worn down, a mere day of eternity will have passed.

Meanwhile, the daughter passes the knife across the stone, dips her fingers in a bowl of water, sprinkles it over the stone, and repeats the passing. The father sits there, absorbed in her skill, wondering at this inversion of the traditional learning process. “Here,” she says, handing over knife and stone. “You have a go.” 

Nicholas Lezard is a literary critic for the Guardian and also writes for the Independent. He writes the Down and Out in London column for the New Statesman.

This article first appeared in the 20 July 2017 issue of the New Statesman, The new world disorder