04 April 2012

European Voice: Robin Hood tax was always doomed to fail

José Manuel Barroso, the Commission president, last week made yet another attempt to exert irresistible force in support of the tax. He told members of national parliaments and the European Parliament that the revenue raised by the tax would allow Member States a cut of up to 50 per cent in their contributions to funding the EU.

Perhaps Barroso's intransigence is inspired by the unfortunate fact that the FTT proposal was central to the Commission's plans for financing the EU's multiannual financial framework (MFF) for 2014 to 2020. Removing the idea of an EU-wide tax from the agenda leaves a big hole in Barroso's plans for financing the MFF.

There was some opportunism behind the Commission's presentation of the FTT proposal. In the wake of the financial crisis, it reflected a sentiment widespread among national governments – and the public – that the financial sector should be obliged to contribute something in return for the hundreds of billions of euros that governments have provided to keep banks afloat... Yet less than a year after the Commission presented its proposal, it has run into a brick wall. Precious time, energy and resources have been spent discussing and negotiating the proposal – to little purpose and no effect.

The Commission obviously needs to pay close attention to political debates at national level to work out where the EU's priorities lie... But the Commission also needs to show the courage to stand up to Member States and tell them what is politically impossible. If Barroso's calculation was that he could blame Member States for a lack of political will when the tax plan was rejected, he miscalculated. His decision to push ahead with a proposal that was destined to fail has damaged his credibility and that of Algirdas Šemeta, the European commissioner for taxation and customs union. The time and energy would have been better spent on other issues.

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