French civil society organizations respond to France’s position on the FTT | November 10 2014
AIDES/Amis de la Terre/ATTAC/Coalition PLUS/Coordination Sud/ Oxfam France
Open letter to Michel Sapin
November 4, 2014
Following the publication on Monday of an op-ed by French Minister of Finance Michel Sapin on the minimalist position of France for the European financial transactions tax (FTTi), and the proposal of the President of the Socialist group at the National Assembly to kill innovative financing for development by ending the airline tax), civil society organisations respond.
The cards are on the table. Finally. In an op-ed published yesterday afternoon in media outlet Les Echosii, you admitted that France supports an European FTT on the cheap, that would exempt transactions on derivatives, recognized as the most speculative transactions.
For us, civil society organisations that have been actively involved in the FTT project for many years, you have officially become the personal advocate of French and European banks, which have not stopped aggressively campaigning against the measure since 2013. This is not a surprise, but the proof of what we had been claiming for months: France has given up on a really ambitious FTT, able to both regulate finance and generate massive fiscal revenues.
Mr. Sapin, you pretend to take a constructive position by proposing a “compromise” you call “ambitious and pragmatic” and able to finally create an agreement on the design of the tax.
In reality, only 1.5 months before the December 2014 deadline, you are but isolated in the negotiations, you are staking your all in a bid to try and impose the minimal taxation basis that you have been defending for months with your counterparts.
In fact, France is under pressure from the other Ministers of Finance of the enhanced cooperation. The German Wolfgang Schäuble, who wants to put an end to the under-‐taxation of the financial sector as compared to other sectors of the economy, wants to tax all financial transactions, even the most speculative ones.
As for the group of “smaller” States, they are not interested in a mini-tax based on the issuance principle, with which they would not collect any revenues. Incidentally, it is to buy their support that you have put on the table your only new proposal: an artificial tactic to pay them off with a share of the revenues to be collected in Franceiii.
Paradoxically, it is a socialist government that is now fighting against an FTT that would improve regulation and create revenue, and consequently is in opposition to Conservative governments such as in Germany.
By describing the project of an ambitious FTT as a “dangerous fantasy” and as a “futile dream”, you are calling not only NGOs and associations dreamers, but also saying the same of governments in favour of a broad-‐based tax, the numerous finance experts who proved the technical feasibility of an FTT on the most speculative products, and even your own political family, the European Socialist Party.
This announcement which jeopardizes the opportunity of raising necessary funds for the fight against global emergencies like climate change, AIDS or Ebola is occurring at the same time as the proposition of the president of the Socialist Group at the National Assembly, Bruno Le Roux, to remove the tax on plane ticketsiv.
Yesterday, like both the government and the National Assembly, socialist leaders simply suggested the end of innovative financing for development, even though it has been France’s trademark globally for years.
Finance Minister, your technical arguments don’t make sense and they reflect a lack of concern and even contempt for the recent reports written by independent finance experts.
- By proposing to tax only actions, like in France, you will not effect “bad finance” but activities which are useful to the real economy in the first place.
- You don’t want to tax derivatives not for technical reasons, but for political ones, in order to protect French banks, including BNP Paribas and Société Générale which are very exposed in such speculative transactions.
- The study of Avinash Persaud, who is a finance specialist of the City, indicated that a tax on derivatives without tax avoidance risk and based on the principle of the financial transactions of the beneficial owner (or end customer) is quite feasible;
- You pretend that you want to tax derivatives by proposing to extend this tax to cover the infamous Credit Default Swaps: too bad, since November 2012 it is already forbidden for most financial actors to speculate on naked CDSs. In addition, CDSs represent only 3% of derivatives globally, a drop in the ocean.
- You propose applying the “issuance principle to determine the tax base (…) and the residence principle” to determine the beneficiary state of the tax raised. The outcome? The French FTT will make less than 800 million euros per year because a part of its proceeds will be paid to the other Member States of the enhanced cooperation. Such a position is particularly surprising when, at a time of budget cuts in public development aid and difficulties in the French budget, the firm Sia Partners firm estimates that the FTT could raise between 9 and 24.4 billion euros depending on the chosen scenario.
Finally, we call on all the stakeholders in the FTT debate not to get caught up in Bercy’s strategy. We call on the members of the European Socialist Party, the finance Ministers of the other states of the enhanced cooperation, especially Germany, and the President François Hollande to stand by his to support a broad FTT which proceeds will make the difference in adapting to climate change and ending new AIDS transmissions.
Stéphane Calmon, Vice-President, AIDES
Florent Compain, President, Amis de la Terre
Dominique Plihon, Spokesperson, Attac France
Alexandre Morel, Director of Programs and Advocacy, CARE France
Vincent Pelletier, Director, Coalition PLUS
Bruno Lamour, President, Collectif Roosevelt
Jean‐Louis Viélajus, President, Coordination SUD
Dominique Tresse, President, Eau Vive
Serge Rabier, Executive director, Equilibres & Populations
Nicolas Vercken, Director of Studies and Advocacy, Oxfam France
Louis Pizarro, CEO, Solthis
iii Handelsblatt article of the 20th of October 2014 : « La mission impossible de Schäuble » : https://kaufhaus.handelsblatt.com/artikel/boersensteuer-schaeubles-mission‐impossible-p7959.html?ticket=ST-5399271-CluBNg1HiU97b2X54TqP‐s02lcgiacc02.vhb.de
iv The tax on airline tickets introduced in 2006 enables the Global Fund to fight against AIDS, Tuberculosis and Malaria, UNITAID, and Gavi, to fight against pandemics.