Reacting to the presentation by the European Commission of its new legislative proposal for a Financial Transaction Tax (FTT) through enhanced cooperation, Nicolas Mombrial, Oxfam’s EU Policy Adviser said:
“The smart design and the scope of the FTT proposed today will make it difficult for financial institutions to avoid or evade the tax - appropriate trades will be taxed whether they occur in Frankfurt, Paris or the City of London. It is vital that this proposal is adopted in full to ensure the financial sector contributes its fair share to the costs of the crisis, which is hurting hundreds of millions around the world.
“The elephant in the room is how the money will be spent - for the FTT to be a 'Robin Hood tax', EU leaders must commit a significant portion of its revenues to be used to fight poverty at home and abroad and tackle climate change."
“Countries which have not yet joined the pioneering EU group need to explain to their voters why they are against a tax on speculators that will raise billions and is designed to protect the real economy.”
Notes to editors:
- The introduction of an ‘issuance principle’ ensures that financial institutions located outside the group of 11 countries would also be obliged to pay the FTT if they traded securities originally issued within the 11 countries.
- The proposed Financial Transaction Tax will fall predominantly on speculators as the EC proposal exempts the first issuances of shares and bonds - that are an important instrument for businesses to raise funding from financial markets - as well as exclude mergers and acquisitions from the tax, allowing companies to restructure without paying the tax. European consumers will not feel a significant additional tax burden, as mortgages, consumer credit and insurance contracts are not included in the tax.
- Despite the request by some MEPs and some Member States to exempt pension funds, Commissioner Semeta stood strong and refused to introduce any major exemption that would have reduced the revenues raised by the tax and its effect on speculation.
- The directive is broader than the several unilateral FTTs agreed in France, and planned in Spain, Portugal and Italy. The Directive broadens these taxes to include a wider range of financial markets including shares, bonds and derivatives, and will replace the national FTTs when it is ultimately implemented.
- The Commission estimates that the FTT by 11 countries could raise €31bn. Recent research by the German Institute for Economic Research (DIW) estimated the potential revenues at €37bn a year.