On 17th July Lancaster City's full council voted in favour of asking the coalition government to join with 11 European countries - including Germany, France, Italy and Spain - that have pledged to introduce a
Financial Transaction Tax (FTT).
Otherwise known as a Robin Hood or Tobin tax, this would be a tax on financial transactions between financial institutions against the exchange of shares, bonds and derivative contracts. The proposed tax would not apply to transactions in the 'real' economy and you can read more about it here. It is intended to reduce speculative trading and is targeted at those responsible for creating the financial crisis. It would raise up to £20bn per year.
The Council also noted that the coalition government is making disproportionate cuts to funding of local government, and called on it to reverse this policy, asking instead for a wider programme to proceed with the urgent reform of the banks, separating the high-street and investment arms, a crackdown on high-earners’ and corporate tax avoidance, and proper regulation of the markets.
The motion was supported by Green and Labour Councillors, and opposed by Conservative councillors, (with the exception of Coun. Johnson, who abstained) with Independents being split.
Coun. Tim Hamilton-Cox, who proposed the motion on behalf of the Greens, said,
“The loss of government grant funding to the city council over the last three years now adds up to £3.1m each year and the council faces losing a further estimated £2.7m in the next 2 financial years. So far the city council has increased efficiency and employed (progressively) fewer people.
"There becomes a limit to the scope for increased efficiency. Cash losses of £5.8m a year add up to a very significant loss to the local economy, undermining the prospects for local businesses. And the cuts threaten more of the services on which many people and organisations rely for assistance and quality of life.
"Britain already has one type of financial transaction tax - the stamp duty on shares that raises £3.5bn a year for the exchequer. A Robin Hood tax would merely extend the stamp duty principle.
"As the European Commission tax chief, Algirdas Semeta, put it recently: 'Taxing the financial sector is a question of fairness. Banks and financial institutions received - and continue to receive - massive support from the public sector to overcome the crisis.' "
Coun. Dave Brookes, who seconded the motion, added,
"Unfortunately, the UK government doesn't see it this way. George Osborne has not only refused to sign the UK government up, but has also launched a legal challenge against the European FTT.
"By curbing some of the worst financial sector excesses, a Robin Hood tax would help to rebalance the economy. And it could help to re-balance the worst-affected local authority, and other public sector, budgets."
Read the full minutes of the council's decision here.