Tobin Tax backed by European Commission [+video]
Plans by 10 EU member states to launch a financial transaction tax (FTT) to help raise funds to tackle the debt crisis have been backed by the European Commission.
The 10 countries, which include Germany, France and Italy, plan to introduce a single rule for tax transactions made by financial institutions.
It is thought, however, support for the financial transaction tax could open up fractions within the Europeon Union, where member states have already been divided on the regulation of banking and budget oversight in individual countries.
The UK has been heavily opposed to the so called ‘Tobin Tax’ because it believes the City of London as a financial centre would be hit particularly hard.
Jose Manuel Barroso, President of the EU Commission, 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”.
The proposal was first introduced by the Commission in September 2011 but failed to win unanimous support among the EU’s 27 member states. But leaders from the ten members in favour of the FTT agreed to push ahead with the plans.
Mr Barroso continues “This tax can raise billions of euros of much-neeeded 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”.
David Hillman, spokesperson for the Robin Hood Tax campaign, said: "We are delighted that the European FTT is moving from rhetoric to reality and will ensure banks pay for the damage they have caused”.
"This shows it is possible to put the needs of the public over the profits of a privileged few”.
"It's unforgivable in this age of austerity that the UK Government is turning down billions in additional revenue to protect the City's elite”.
Under a legal process called enhanced cooperation, at least nine member states had to support it in order to allow a minority of member states to go ahead with the proposal.
In September 2011, the Commission proposed the charge of the tax should be imposed at a rate of 0.1 per cent on the trading bonds and shares, and 0.01 per cent for derivatives.
The plan by the 10 countries will now have to be accepted by the EU’s members through a qualified or enhanced majority vote and get the support of the European Parliament.
The Information Daily’s Editor-In-Chief, Shamit Ghosh, said the plan for a FTT “highlights the deep divisions not only between the single currency zone and wider EU but also within the eurozone. Finland and Netherlands for example are key opponents of the FTT within the eurozone.
“Further, over 70% of all financial transactions in Europe happen in the UK and therefore unless Westminster buys into this programme which it will not - then the revenue potential from this tax would be negligible,” he said.
“Although Federal Europe is the rhetoric across the channel, last weekend's summit and this FTT move demonstrates a more and more fragmented eurozone and Europe.”
Based on last year’s ideas, the Commission will now create a new proposal which will be changed to incorporate just 10 of the previous 27 member states.
Speaking exclusively to The Information Daily, Fredrik Erixon, Director of European Centre for International Political Economy said “it is a pretty embarassing proposal”.
The ten countries backing plans for the introduction of a FTT are France, Germany, Spain, Belgium, Greece, Austria, Italy, Portugal, Slovenia, and Slovakia.