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Government should tax financial speculation - UCD sociologist printable version

15 Oct 2012: posted by the editor - European Union, Ireland

The government decision to reject the proposed EU financial transaction tax is a deeply retrograde step, according to UCD sociologist, Kieran Allen.

"The EU tax amounts to a levy of a mere 0.1 levy on the trading of shares and bonds and a 0.01 levy on derivatives. It appears that the government has learnt nothing from the economic crash of 2007 that brought the world economy to the verge of ruin. This crash was triggered by a huge growth in financial speculation which was divorced from investment the real economy," said Mr Allen.

"By the time the crash has occurred, for example, over 40 percent of the profits of corporate America was being derived from financial and property speculation—as against only 15 percent in the 1960s. When this form of casino capitalism came crashing down, the gamblers brazenly asked for state hand-outs.

"In Ireland, taxpayers are stumping up €64 billion to bail out the financial sector—yet the government is now claiming that this sector cannot bear a tiny tax on its trading activities

"The mass of the people of Ireland have seen a hike in PAYE taxes due to changes in tax bands and the imposition of the Universal Social Charge. Yet the government is claiming that the wealthiest sections of people in the financial sector should not make any sacrifices.

"The government's claim about job losses results from the scaremongering that has been instigated by the biggest financial companies. They have produced no cost-benefit analysis to show how the supposed loss of jobs might be traded off against increase revenues to the state. Instead they rely the figures produced by the big finance houses who are intimately connected to the state through the IFSC Clearing House Group.

"Their arguments only begs the question why is it legitimate to slash 30,000 jobs in the public sector while they forego a major revenue stream to protect an unknown number of jobs in the financial sector.

"Noonan's rejection of the EU financial transaction tax indicates that this government sees Ireland's future as a tax haven that facilitates financial speculation.

"This is not a sustainable basis to build a proper economy that provides jobs. Instead of constantly pandering to the speculators, we need to examine new directions for the Irish economy."

* Kieran Allen is the author of Ireland's Economic Crash and the Corporate take Over of Ireland. He is currently researching Ireland's status as a tax-haven.

Tags: EU financial transaction tax

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