In 2013, the EU proposed that a tax on financial transactions – aka a Tobin tax, named after the man who thought of it – would be introduced on 1st January 2014 but when this proved problematical it was delayed until January 2016.
It’s been widely condemned because although is sounds insignificant at 0.1%, it is applied at all stages of a financial transaction which means it mounts up as it multiplies. The main worry for the UK working man is that it is likely to mean an increase in mortgage rates.
In April 2013, George Osborne filed a legal challenge of the decision authorizing the use of enhanced cooperation to implement the FTT with the European Court of Justice. Osborne said that “we’re not against financial transaction taxes in principal but we are concerned about the extra-territorial aspects of the Commission’s proposal”. A Finance Ministry spokesman said that “we will not stand in the way of other countries, but only if the rights of countries not taking part are respected” and that the current Commission proposal “does not meet these requirements.” Luxembourg’s Minister for Finance Luc Frieden said that his country was “very sympathetic” to the UK’s legal challenge and would “bring arguments in support of the case”.
On 30 April 2014, the European Court of Justice dismissed the United Kingdom’s action against the authorization of the use of enhanced cooperation, but didn’t rule out the possibility the UK could challenge the legality of the FTT itself if it is eventually approved. Osborne has threatened a new challenge if the FTT is approved. In other words, he’s going to shut the stable door after the horse has bolted and she if he can get the horse to come back of its own accord!
So why didn’t it happen this January? Well us awkward sods in the UK insisted that we should have a referendum on the EU so guess what? It’s been delayed until ‘mid 2016’ or to put it another way until after the referendum.
George Osborne says that Britain will never accept the tax. He’s lying because that would mean that 27 other EU countries would have to agree with him and he knows that ain’t gonna happen!
So at the risk of sounding a bit like the doom-mongers of Project Fear, if you want the cost of your mortgage to go up, then vote to remain in the EU. And – just for once – this scare is actually real…