Anni Podimata (S&D, EL) stressed on her draft report that the idea of a tax on financial transactions (FTTs) -already suggested since 1930s – presents an important advantage especially today in the aftermath of the crisis. By placing an FTT we can curb speculation and stabilize markets, we can create incentives for long term investments, we can put an audit trail on every transaction and thus reinforce transparency and we can make the financial actors assume their fair share for the cost of the crisis.
Moreover with the revenues potential of a 0.05% FTT being nearly 200 bn € in EU and 650 bn $ at global level, it can decisively contribute to the need for new and sustainable resources.
The global crisis has revealed the need for global responses and therefore the introduction of a global scale FTT is of course the best possible way to move forward. However and in spite of the progressive views of the G20 summits right after the crisis, there seems to be today a retreat towards "business as usual". If we leave this momentum go by and opt for inaction, we will be unable to draw the right lessons of the crisis and deem our economies for yet another hit in the years to come.
EU is today the biggest financial market of the world and as such its own interest is not to "hide" behind the reluctance of its international partners but to lead the way both at global and European level.
The long anticipated impact assessment by the Commission on the feasibility of an EU FTT - already asked by the EP since March 2010 but absent from the Commission's Communications of April and October 2010 - should be presented as soon as possible. It should constitute the first step towards legislative proposals for the introduction of an EU FTT. At the same time this will provide a clear mandate for the EU to put pressure at G20 level.
Regarding the argument on competitiveness risks possibly caused by unilateral introduction of an EU FTT, the recent examples of UK stamp duty or of the Hong Kong FTT show that a well designed FTT can efficiently deal with that risk and avoid transaction flaws. Moreover investors are not going to be keen to opt for less known or opaque jurisdictions if the transaction costs are low. The main actors tempted to "migrate" will be the extremely short term traders (which will assume the main burden), but even if parts of short term transactions fly outside EU, this could be of an added value for the European economy.
The main features for an EU FTT should be:
_ Low rate, between 0.01% and 0.05% so that there is no important risk for transaction flaws;
_ Broad tax base including every type of transaction, in order to enable a level playing field and avoid flaws towards less regulated parts of the financial sector;
_ Clearly defined exemptions and thresholds, taking into account the needs of the retail and small investors.
© European Parliament
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