Lest we think America is the only one with a dysfunctional political system, the European Union has just created a legal and logistical mess for itself. After British Prime Minister David Cameron rejected a treaty that would subject Britain to new financial regulations, Germany and France organized a separate economic bloc that would operate independently of the E.U. One of the provisions likely to have been in the treaty is a financial transaction tax, increasingly known as the Robin Hood tax, which would charge a small fee for stock trades.
What’s the Big Idea?
For Britain, the financial regulation treaty posed the now-familiar dilemma of strengthening the European Union at the expense of British sovereignty. A financial transaction tax is viewed by British politicians as a tax on London, which is easily the largest financial center in Europe. The tax, which is gaining popularity in the public imagination, would charge a small amount for each stock trade—fractions of a cent—both to generate income for cash-strapped governments and discourage the kind of speculation that is partly to blame for the current crisis.