"The legal services of the European Council, the institution which represents governments of the 28-nation EU, said in their 14-page legal opinion dated September 6 that the Commission's transaction tax plan "exceeded member states' jurisdiction for taxation under the norms of international customary law".The same report says that Commission was defending the tax. Specifically, Algirdas Semata, the European Commissioner responsible for taxation told reporters:
"We are confident that the Commission's arguments and arguments of the legal service of the Commission will demonstrate very clearly to our member states that the approach which has been taken in the proposal is the correct one and does not breach any provisions of the Treaty"I really hope that he is right.
I believe that it would be an absolute traversty if the lobbyists, led by the UK Chancellor and the City of London, could be allowed to get away with this.
Apart from anything else, the UK is clearly guilty of the worst kind of hypocrisy. They have been imposing Stamp Duty at 0.5% on trading in UK shares since 1986. And they charge the tax even if you buy the shares outside the UK, raising billions in revenue for the UK government every year. Claiming that the 11 European countries should not be able to do effectively the same thing is simply outrageous. I hope that someone will be sueing the UK government for "illegally" imposing Stamp Duty on trades occuring outside of the UK.
But the other thing is that, as the BIS Triennial report just demonstrated, of the $5.3 trillion a day in foreign exchange churning the financial system, 40.9% is done in the UK, and specifically in the City of London. This bloated activity completely dwarfs even the US (19.9%), Singapore (5.7%), Japan (5.6%) and Hong Kong (4.1%). Eurozone countries hardly get a look in, with even France (2.8%) and Germany (1.7%) barely registering.
And yet, the Euro is involved in 33.4% of all these transactions, with USD/Euro transactions accounting for 24.1% of all the trading. How can you justify the situation where this trading, which directly affects those in the Eurozone should be continuing in the City of London with absolutely no possibilty of imposing any form of regulation?
It seems to me that it would beextremely reasonable to propose a system in which each Central Bank should be allowed to impose a tax on all exchanges involving their currencies. It would provide a simple and effective way for Central Banks to remove excess money from the system and prevent any inflationary tendencies. It would allow them simultaneously to inject new debt free money into the economy by providing funds to either central governments or directly to citizens, and remove the excess from the part of the economy that clearly has more money than it needs.
But as long as the City lobbyists have the power to prevent the introduction of intelligent control mechanisms, the outlook is gloomy indeed.