The UK has secured a promise from its European Union partners that EU supervisors will not be given the power to force national governments into recapitalising banks with taxpayers’ money.
The promise, contained in a statement after an EU finance ministers’ meeting in Luxembourg on Tuesday, eased British concerns about whether an overhaul of EU financial supervision might restrict national fiscal sovereignty.
But a small group of EU states, led by the UK, opposed such an expansion of EU-wide supervisory powers, saying it would undermine the principle that taxation is a matter for national governments, not the EU.
I find this extraordinary.
The governments that won in the EU elections (and many ruling parties did do well) were those that tackled their finance industry. They got popular support for doing so. Labour will not tackle finance. It's at the core of its weakness. It did badly.
And anyone with any sense knows finance and tax are global. Finance has to be regulated globally. That way you bring the banks to account. And you expose the secrecy spaces they use, like tax havens. They have to be brought into the regualtory reginme: something the UK still seems to be deliberately resisting, at cost to the world at large.
But what I find most annoying is the argument about tax sovereignty. We long ago conceded that on VAT. And the reality is that tax yield is based on the combination of tax base and tax rate. You can control one of those two at any time, but not both at once.
If we cooperated on tax base protection then we could have sovereignty on rates. That makes sense. Bet foregoing most rax sovereignty whilst pretending we can do the impossible on rates and base at the same time is just folly: it cannot produce sustainable outcomes that ensures the UK can impose the taxes it wants. And of course our finance industry wants that outcome - and Labour delivers, as will the Tories.
Who pays - you do, I do, everyone in the UK does as more and more of the tax burden shifts away from business and capital and onto ordinary people.
Labour has to re-learn tax. It really doesn't understand it right now.