FTT moving from rhetoric to reality but EU must heed Gates' call to help poorest - Oxfam

European Commission President Jose Manuel Barroso today threw his full support behind an EU Financial Transaction Tax (FTT) arguing that banks must make a '”contribution” back to society after the €4.6 trillion of taxpayers' money they have received in the last three years.

Oxfam said this was the latest evidence that unprecedented public and political support is building behind an European Union-wide Financial Transaction Tax before the EU Heads of State Summit on 17-18th October and for a global agreement before the French G20 Summit on 3-4 November.

Nicolas Mombrial, Oxfam International's EU policy advisor, said:

“The FTT is moving from rhetoric to reality but a significant part of the revenues should be used as Bill Gates suggested, to help poor countries facing chilling reductions in aid, trade, and investment - not just shore up the EU budget.

“An FTT is not a 'Robin Hood Tax' unless clear commitments are made to use the revenues for tackling climate change, and poverty at home and abroad."

The European Commission will present its full legislative proposal for a Financial Transaction Tax (FTT) at 13:30 CET today.

At present, the EC proposals suggest that the revenue raised could go to the EU budget or national budgets, and makes no commitment as to what the revenues could be spent on. Oxfam does not have a view as to whether the tax would be best spent via the EU budgets, national budgets or other mechanisms – however for an FTT to be progressive and the 'Robin Hood tax' that millions of European citizens wish to see implemented, EU leaders, finance ministers and the European Commission must commit in the next few weeks the money should be used to help poor people hit by the economic crisis at home and abroad, and tackle global challenges such as climate change.

Proposed rate of 0.1% is too low

The EC has proposed a levy of 0.1% on trading of shares and bonds and of 0.01% on derivatives. Based on earlier EC analysis, this could raise roughly €55bn a year. Oxfam says the proposed rates are too low, it's clear that higher rates are perfectly feasible and would raise more money to tackle poverty. In the UK, a rate of 0.5% applies to equities.

Next steps at EU level

EU Finance Ministers next week (Oct 4th) are expected to discuss the proposal as part of pre-G20 and EU summit discussions. Besides the EC, there is strong support for an FTT from France and Germany, and other countries supporting an FTT at EU level include Spain, Finland, Luxembourg, Belgium, Austria, Hungary, Greece and Portugal. Bill Gates, who has been commissioned to write a report on development financing for the G20, also supports the FTT, as widely reported last week.

International development agency Oxfam is member of the ‘Robin Hood Tax’ coalition in the UK, France, Germany and a number of other European countries calling for new financial sector taxes to help tackle poverty and climate change, at home and abroad. Millions of supporters are behind the campaign which is endorsed by over 1,000 leading economists.

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Oxfam supports the Robin Hood Tax