Thursday, February 25, 2010
In its latest economic strategy document, the European Commission has urged European Union member states to consider the introduction of taxes levied on financial transactions in order to increase their revenue.
According to the Commission, new tax bases, including financial transactions, should be explored, in a coordinated manner, in a bid to generate much-needed additional income for European governments, buckling under the weight of enormous budget deficits.
The idea of imposing a tax on financial transactions has risen to the top of the political agenda in the wake of the global economic crisis, as many leading banks have had to be bailed out by their governments.
While preferring a global approach through the G20, in order to prevent an exodus of bankers out of Europe, the Commission has now confirmed its willingness to consider the idea of introducing a purely EU-wide tax, if a worldwide tax proves unachievable.
The Commission is to carry out an impact assessment of such a tax, to see how far it could contribute to stabilizing financial markets and to preventing a similar crisis by targeting “undesirable” transactions.
As part of a resolution adopted on February 23, the European Parliament confirmed that it favours a globally implemented tax "to discourage excessive risk-taking by financial institutions and to ensure the industry pays for the damage caused by the financial crisis." However, the Parliament's Economic Affairs Committee believes that if a worldwide tax proves unachievable, the EU "could consider going it alone."
The Economic Affairs Committee has also urged the Commission and Council to examine how the tax could be used to help developing countries fund the fight against climate change, to finance development cooperation, and to contribute to the EU budget.
The Council and Commission are due to debate the issue in March at the forthcoming plenary meeting in Strasbourg.