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Pendulum swings firmly in favour of Eurozone financial transaction tax

A very broad agreement in favour of an EU financial transaction tax emerged on Monday, at the start of the Economic and Monetary Affairs Committee's work on the legislative proposal. Spokespersons for Parliament's various political groups all advocated such a tax, at least throughout the Eurozone, and many deplored France's weekend hint that it could go it alone.

Various MEPs said that in recent months they had shifted their position in favour of a financial transaction tax. Wolf Klinz (ALDE, DE) explained that this was  "because the financial sector has not learnt the lessons from the crisis". 

The shift suggests that  more MEPs may favour the proposal than was the case some months ago.  Only the ECR spokesperson, Czech MEP Ivo Strejček, stood by his group's fundamental opposition to the tax.

Parliament an early mover in calls to tax financial transactions

By narrow margins, Parliament had already pronounced itself in favour of a financial transaction tax towards the end of 2010 and more specifically in March 2011.  The Commission tabled its legislative proposal late in 2011.

Commission proposal a good start but fine tuning needed

Opening the discussions, Socialist rapporteur Anni Podimata (EL) broadly welcomed the Commission proposal, noting that its broad scope should capture a large majority of transactions and reduce the temptation for financial service providers to relocate outside the EU. 

She added however that transactions on EU financial products between non-EU parties would not be covered by the proposal and that the proposed rate of tax on the end of trading day transaction volume would be too low.

A necessary tax

Sirpa Pietikainen (EPP, FI), voiced the large majority view that the tax would need to be implemented by, at the very least, all  the Eurozone countries. 

Pascal Canfin (Greens, FR), rejected the argument that "ordinary consumers" would see the cost of the tax shifted to them, noting that the main "consumers" on financial markets are in fact high-frequency traders and banks trading for their own profit. 

Jürgen Klute (GUE/NGL, DE), argued that the tax would not constitute "revenge" on the financial sector but rather make it share some of the burden of the crisis, along with all other sectors.

A damaging tax

The ECR group struck a lone chord with all its representatives warning of the dangers of the tax.  "Relocation of financial players will take place within weeks at most", Mr Strejcek said, adding that banks should not be penalised since it was states, not banks, which were most responsible for the crisis. 

Marta Andreasen (EFD, UK) also said that she found it "incredible that we are discussing a financial transaction tax for 2014 when the Euro is burning".

Next steps

The draft report is scheduled to be presented on 28 February, put to a committee vote in early April and a plenary one in June.  Parliament has a legal right to present an opinion on the Commission proposal.

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