The European Parliament is calling on the European Commission to introduce legislation for a financial transaction tax.
This morning, the Parliament voted to back a report calling for the tax as its submission to an EC consultation on taxing financial services.
When the report was launched, its author, Greek Socialist MEP Anni Podimata, said: “The main advantage of innovative financing tools is that they can bring a double dividend, contributing to the achievement of important policy goals, such as financial market stability as well as offering significant revenue potential.”
The Podimata report suggests a tax of between 0.01 and 0.05 per cent on all transactions to avoid flows towards less regulated parts of the financial sector.
It adds there should be clearly defined exemptions and thresholds and should take into account the needs of the retail sector, small investors and individuals.
The European Commission is currently carrying out an impact assessment of the proposal and Cicero Consulting analyst Tim Gieles says the largest group in the parliament, the 265 MEP European People’s Party, has introduced a caveat to its support for the proposal.
He says: “The EPP emphasises that only if the Commission’s impact assessment is favourable to the tax at an EU level will the EPP group support it.”
The Commission supports the FTT at a global level but in the past has suggested that if such a measure is only to be introduced at a European level it would prefer a Financial Activities Tax targeting remuneration of financial service companies.
529 MEPs voted in favour of the report but withdrawl of the EPP’s support could scupper the proposal. No UK MEPs are in the EPP.
The Commission launched its consultation on financial sector taxation in February. It will come forward with legislative proposals later this year.
In the vote 529 MEPs in backed the report, 127 voted against and 19 abstained.