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European Parliament calls for financial transaction tax

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.


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There are 9 comments at the moment, we would love to hear your opinion too.

  1. Tax burdens are borne by the people through higher costs of goods and services, not by corporations.

  2. Richard Lockhart 8th March 2011 at 2:51 pm

    Can’t come soon enough – This is the one thing that the Banks will struggle and scream about – as it will effect profitability , which in turn effects their bonuses.
    Tobin or what ever in the UK – can’t come quickly enough to damp down the huge profits on these esentially computer driven trading profits.
    0.5% would be even better

  3. Michael Fallas 8th March 2011 at 3:12 pm

    This is not a tax on Banks it is a tax on consumers as they will ultimately pay the tax.

    if you have a problem which you cannot solve then the classic case made is “tax it” as they did with “global warming” by bringing in higher tax on air travel etc. It won’t make any difference but makes a good argument for increasing taxes on consumers.

    The best people to get value from their own money are consumers themselves not paying taxes for others to squander in administration costs and bureaucracy.

    Tax is like a lead balloon to progress and freedom.

  4. Mike Wynne-Powell 8th March 2011 at 3:22 pm

    Another EU directive. Before this is progressed any further, the law of unintended consequencies should be looked at.
    E.g. Who gets the Tax, the Country who levies it or the EU, who still have no audited accounts?

  5. Not a good idea – Tax will flow to unaccountable corrupt EU and who has to pay?
    Not the banks but us the consumer .

  6. The tax would be a useful idea to discuss. The process of passing the cost down the line to the consumer is a problem to be noted and addressed. There are always solutions to problems.
    That the money ends up in EU coffers is also a matter to be addressed. It doesn’t have to occur that way.
    If it is felt that a “tax” could be a useful control then debate it, and the surrounding problems. Solutions will occur, sometimes in unexpected ways.
    Just make sure that politicians are not the only people debating the issue. If they take the lead then the solution is likely to be a disaster.
    What is frustrating is the lack of an adequate forum for non-politicians to both examine the evidence and debate their opinions. Generally the only reaction to a proposal is the option to blog at the end of an article – and then those comments are lost into history.
    Despite the existence of the web and fast communications we are actually little further on in creating a genuine communication facility – it’s really just everyone having a small shout at the wall. And it is highly unlikely that politicians are in any way aware of what is said.
    Can someone invent the” Wiki Discussion Forum”.

  7. Sure, there’ll be an impact assessment costing £millions but the end result is already known.

    The bureaucrats, corrupt politicians and thieving governments will argue that it is all in the consumers’ own best interest but they can argue black is white and not blush.

    We live in a rotten world where bankers receive £million bonuses despite bankrupting our economy whilst all us workers are taxed ’til the pips squeak.

    Forget the Tunisians, Egyptians and Libyans – we need a European-wide revolution to expunge the rotten political, regulatory and judicial systems we have allowed to grow like a cancer over the past 50 years.

  8. Mike Wynne-Powell 8th March 2011 at 10:39 pm

    Anonymous of 8 Mar 2011 3:22 pm.

    I agree with Bill Wells and would suggest we should be lobbying our MP’s to stop the creeping loss of Democracy in the UK due to laws/taxes etc that come from some branch of Europe.

    Votes for prisoners, no gender risk on any insurance, the removal of policy loans on With Profits plans on 1st February and the list goes on, with this potential tax from Europe. At this rate we will not need our own Parliament in a few years time.

  9. Keith Davidson 9th March 2011 at 9:26 am

    We have this tax already. It’s called stamp duty. Extending this to certain other financial transactions might have some validity but it just sounds like government trying to get their finger in what is left of the pie, after already being given their own big slice.

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