The latest cuts to France's aid budget were not well received by French members of parliament, who voted on 7th October to extend the Financial Transaction Tax (FTT) to make up the shortfall.
During the examination of the draft budget for 2016, French MPs in the National Assembly’s Finance Committee adopted an amendment to broaden the scope of the FTT to speculative trading operations, or day trading. This consists of buying and selling stock on the same day, and accounts for around 40% of all transactions.
France introduced the FTT in 2013, as a 0.2% levy on the purchasing of shares in around one hundred of the largest French companies; those with a market capitalisation of over €1 billion. In 2014, €140 million from the FTT (out of a total revenue of €700 million) were assigned to France's development budget.
The goal of the amendment presented to the Finance Committee by Socialist MP Pascal Cherki was to “raise further fiscal revenue, particularly with a view to increasing finances for international solidarity efforts and the fight against climate change”.
A threat to European negotiations
“This first objective fits with the president's promises on the allocation of the Financial Transaction Tax and on his willingness to increase official development assistance by €4 billion by 2020,” the amendment stated.
Despite the recent announcements by François Hollande, French official development assistance (ODA) is set to fall by 6%, or €170 million, in the 2016 budget. Since 2012, France has cut its aid budget by €500 million, and the OECD objective of spending 0.7% of gross national income on international solidarity efforts is slipping further out of Paris’ reach.
The gap between France's promises and the realities of its budget prompted MPs of all parties in the Finance Committee to support the amendment to the FTT. Before being passed into law, the amendment will have to pass through the plenary, where it will likely meet with resistance from the Finance Ministry, which fears any changes could derail the European discussions on the tax.
“The main aim is to succeed in the negotiations under way at a European level, so we have to avoid anything that could undermine this negotiation process and ensure regulatory stability until the European tax comes into force,” a source from the French Ministry of the Economy said.
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