Executing Robin Hood: Financial Political Power and the Case of the EU Financial Transaction Tax

This paper contributes to the growing literature on financial political power through an investigation of the EU Financial Transaction Tax (FTT) policy process. The proposal garnered a powerful coalition of supporters including leading EU member states, the European Commission, the European Parliament, civil society groups and the broader European public. Despite this, the financial industry successfully resisted implementation of the FTT until 2016 and crucially, secured a wide range of exemptions for particular transactions and market participants. These modifications hugely decrease revenue raising levels and threaten to render the FTT unviable due to the prospect of widespread evasion and/or relocation by financial firms. The paper argues that this outcome is the result of financial political influence exercised at both a micro and macro levels of analysis. At a micro level, I find evidence for the ‘actor plurality thesis’ contending that the financial sector is able to ‘leverage’ its influence over policy outcomes by successfully tying its regulatory preferences to the interests of other non-financial groups indirectly affected by the proposal; in this instance, central banks and non-financial corporations. At a macro level, the paper demonstrates the potency of ‘structural dependency’ concerns as policymakers eventually capitulated to the fear that a unilaterally imposed FTT would decrease EU global competitiveness and harm a fragile economic recovery. Such considerations are particularly acute for EU policymakers both the context of crisis and in the context of the deep-rooted financialisation of the European economy.