Adoption of a Financial Transaction Tax in Europe Through Flexible Integration

The scale of the financial crisis of 2008 shocked the world and had a negative impact on millions of people, leading to calls for increased regulation to protect consumers and to prevent a repeat of these difficulties. This PhD thesis addresses one of the forms of regulation debated post-crisis, namely the European Commission’s 2011 Proposal to introduce a Financial Transaction Tax. The thesis explains the economic rationale for the tax and the obstacles the proposal has faced, both political and legal. Particular emphasis is placed on Article 113 TFEU, which requires unanimity for an indirect tax to be adopted at EU level. The main content of the thesis addresses more flexible forms of legal integration in other areas of EU competence, multi-speed Europe, a la carte and variable geometry. It also contains a discussion of the Treaty mechanism of Enhanced Cooperation. Whilst the thesis favours the introduction of a Financial Transaction Tax relative to other forms of tax regulation, such as bank levies and VAT charged on financial services, it does recognise that there are alternative measures and criticises the 2011 Proposal for being too ambitious and being framed in terms of fairness and fundraising. Ultimately, it argues that in an era where European Union membership has increased beyond the founding six Member States, more flexible forms of integration need to be used for matters which can be considered to be public goods. The argument is made that in order to introduce a common Financial Transaction Tax, the European Commission should have adopted a more graduated approach than the one followed, which allowed for a minimum standard commonly agreed to provide a public good, and to provide incentives for Member States to opt in to additional protocols.