European Commission (EC) has given approval today for imposing the tax on financial transactions (FTT) in 10 EU countries, according to AFP and EFE.
The list of the 10 states that have informed the EC that will participate in an “enhanced cooperation” for a tax on financial transactions include: Germany, France (both behind the initiative), Austria, Belgium, Portugal, Slovenia, Greece, Italy, Spain and Slovakia. Estonia was also willing to participate, but the Commission has not yet received a letter from the government of this country.
This is an important step to initiate an enhanced cooperation on this issue, as the 27 EU member states failed to reach an agreement. The variant of “enhanced cooperation” provided for by the Treaty on the Functioning of the EU, allows a number of at least one third of EU Member States (which currently means minimum nine states) to act in a field that is not Community competence.
The Commission found that all legal requirements are met to authorize these 10 states to go before the others in this initiative and confirmed that the European market functionality will not be affected by the new tax, called “Tobin tax” after American economist James Tobin, who first proposed it in 1971. The next step would be for the 27 states to agree by qualified majority, though the fee will be applied only in the 10 states. However, the European Parliament vote is required.
European Commissioner responsible for taxation, Algirdas Semeta will later make detailed proposals on the level of this tax, based on suggestions made by the Commission last year which were met with the opposition of countries such as Great Britain, Sweden and Poland, concerned of a possible migration of capital to other financial markets outside Europe.
The European Commission proposed last year charging all transactions between financial institutions (banks, stock exchanges, investment firms, insurance companies, hedge funds). Transactions in shares and bonds would be taxed at 0.1% and derivative contracts by 0.01%. These charges will be applied when at least one of the financial institutions involved in the transaction is a country that adopted the initiative.
European Commission President José Manuel Barroso said he was “delighted” by the willingness of the 10 member states to participate in the FTT, which will mean collecting billions of euros, necessary for EU 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,” Barroso said.
According to Commission estimates, if all 27 EU countries would charge this tax, annual revenues would amount to about €57 billion. French Minister for European Affairs, Bernard Cazeneuve, said Tuesday that if the 11 countries (the 10 countries mentioned plus Estonia) will participate, the annual revenues will exceed €10 billion. The destination of these funds is still debated.
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