EU Finance Ministers are divided over the introduction of the financial transaction tax which has been proposed at a level of 0.1% for shares and bonds and 0.01% for derivatives.
The so called tax is expected to raise an income of about €57 billion to the EU and also to make sure the financial sector contributes its fair share to the crisis most were rescued from. It is also meant to discourage banks from getting into risky business practices as well to encourage competition within the EU’s Single Market.
Championed by George Osborne (Member of British Parliament ), Anders Borg (MEP Sweden) and Jan Kees de Jager (MEP Netherlands), MEPs against the proposal are afraid the move will hinder competitiveness, damage financial institutions in the EU as well as create additional cost for families. According to UK MEP, Marta Andreasen, “as much as the FTT does not become a global tax, the financial sector could move to other more tax-friendly locations.”
Arguing the UK has more to lose in this, Godfrey Bloom UKIP MEP said, “Other EU countries, when it comes to financial services are Mickey Mouse. Financial services are 14% of UK GDP. The UK contributes £50 million a day to this crumbling institution.” In strong support of the opposition, the British Bankers’ Association stated, “we remain steadfastly opposed to the introduction of this tax, for the reasons that it will: negatively impact on growth and employment in the EU.”iv Also expressing strong opposition, David Cameron, the British Prime Minister alleged FTT could cost the EU 200 billion Euros, about 500 thousand jobs as well as force 90% of some markets away. “Even to be considering this, at a time when we are struggling to get our economies growing, is quite simply madnessv”, he said.
A study by the Bureau for Investigative Journalism revealed “last year City money made up 50.8% of all Conservative Party donations, a leap from 25% five years previously, when Cameron and Osborne took over the helm.”
The FTT tax proposal is championed by the French and German MEPs. However, while German MEPs are canvassing support for it, the country’s association of bankers is in opposition. According to Michael Kemmer, “the decision to introduce a European financial transactions tax is a mistake. A tax of this kind will damage the European financial industry.”
At the moment, MEPs from Austria, Belgium, Estonia, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain are in favor of the proposal. Delighted about this development, President of the EU Parliament Martin Schulz said, “The Financial Transaction Tax is matter of justice and I am pleased it is receiving enough support from the Member States to go forward under enhanced cooperation.”
Commissioner Algirdas Šemeta gave the green light for FTT to be implemented in 10 Euro Area member states based on “enhanced cooperation” (a procedure where a minimum of nine EU member states are allowed to cooperate in an area within EU structures but without the other members). Elated, President Barroso said: “I am delighted to see that 10 member states have indicated their willingness to participate in a common FTT along the lines of the Commission’s original proposal. This tax can raise billions of euros of much-needed revenue for member states in these difficult times. This is about fairness: we need to ensure the costs of the crisis are shared by the financial sector instead of shouldered by ordinary citizens.”
Since MEPs in support of the proposal now have the green light to introduce it in their countries, opposing MEPs will have to wait for its result in order to decide.
By Gloria