MEPs Push EU Tobin Tax
Friday, March 12, 2010
In a recently adopted resolution, the European Parliament has emphasized the
need to develop plans for a global tax to discourage excessive risk-taking by
financial institutions and to ensure that the financial industry pays for damage
caused by the financial crisis.
According to a recent European parliamentary statement, European Members of
Parliament (MEPs) have stated that, if a worldwide tax proves unachievable,
the European Union (EU) could consider the option of going it alone.
Parliament has asked the Commission to develop the transaction tax plan in time
for the EU to present a common position to the G20 in June, and to assess how
such a tax could help stabilize financial markets and prevent a similar crisis
by targeting "undesirable" transactions. The resolution states that
these “undesirable” transactions should be specifically identified
by the Commission.
The Commission and Council are also urged to examine how the tax could be used
to finance development cooperation and to help developing countries to combat
climate change, as well as how the tax could contribute to the EU budget.
Although MEPs favour a global approach through the G20, they are eager to evaluate
the advantages and disadvantages of introducing a purely EU-wide tax, even if
the EU's main partners do not introduce such a tax.
The resolution underlines the fact that: “Any such tax must not harm the
banking system's ability to perform its vital role of financing real economy
investments, and must not encourage the migration of capital”. Negative
repercussions on small businesses and individual investors must be avoided."
According to Economic and Monetary Affairs Committee MEP Edward Scicluna, the
resolution “is not advocating one model or another, but aims to launch
work on many questions that need answering”, adding that "there are
as many advocates for this tax as there are detractors", and impact assessments
would be needed.
Replying for the Commission, Tax Commissioner Algirdas Semeta said it believed that the issue
is best tackled at global level, since this is the only way to prevent capital
flight. He also said that the Commission was considering regulating the financial
industry by means of such a tax and that without a well-defined distributive
mechanism, the revenue generated could end up in those few countries with
large financial centres.
The resolution on a financial transaction tax was approved with 536 votes in
favour, 80 against and 33 abstentions.