I am aware that Algirdas Semeta is a politician. But this series of untruths in a public place is really almost unprecedented. He's talking about the new financial transactions tax that is to be implemented in 11 eurozone (that is, the part of the European Union that uses the euro) next year. Given that he's the Commissioner responsible for it he does have to support it. But couldn't he be rather more accurate with his factual declarations?
The levy will ensure that the under-taxed financial sector finally makes a fair contribution to the public purse.
No, no it won't. As I pointed out in this paper it will not be the "financial sector" which picks up the burden of this tax. My source? The European Commission's own paper into the subject. The people that will bear the burden of the tax are the workers in the form of lower wages.
Second, the tax offers substantial new revenues. Around €30-35bn (£26-30bn) per year will be generated from this small tax of just 0.1% on bonds and shares and 0.01% on derivatives. This means new resources for growth-friendly investment, stabilising public finances or wider commitments such as development aid.
No, no it won't. My source? That same EU paper on this tax. They point out that it will shrink the EU economy. Sufficiently so that less tax revenue will be raised overall. Recall, this is what the EU itself said about this tax.
Finally, it should help to deter the irresponsible financial trading that contributed to the crisis we are in today. It will favour steady financial activity over high-risk speculation and steer the financial sector towards the real economy.
No, it won't even do that. What toppled the financial system was residential mortgages. These were hardly traded. Like almost all bonds they were issued, traded maybe once or twice, then sat on balance sheets until they went bust. This tax will hit the options, futures, commodity and FX markets. None of which had anything at all to do with the financial crash.
But then I guess that's politics for you.
But looking for the silver lining there is in fact one here. This is to be a regional financial transactions tax. We've therefore got the opportunity to study the effects of this one before deciding whether to implement one ourselves or not. Here in the UK we already have people shouting that "because they've got one we should have one too!". Which is entirely and totally incorrect: it is remotely possible that the advocates of the tax are correct. I certainly don't think they are but I'm willing to concede a micro-possibility that I could be wrong. But before we jump off the cliff just because they have shouldn't we wait and see what the effects are first? If I'm right then we'd really rather not have followed them. And if they are then there's still time to do it in five or ten years time.
That is, precisely because they've got the tax let's wait and see, shall we?
