In the past three days, the Commission president has met with leaders from Australia, New Zealand and Singapore to outline why the EU needs their support for the implementation of a financial transaction tax (FTT).
Not one of the three countries have shown any support for the tax, despite campaigns in their parliaments and by civil society groups to have the measure approved.
Though Barroso is speaking to the leaders about many issues, including climate change, he appears to be making it his personal mission to garner support for the tax ahead of the next G20 summit in Cannes. The idea was quashed at the last G20 summit in Seoul.
Before the next G20 meeting in early November, the European Commission will unveil draft legislation for an FTT in Europe which would form part of the bloc's seven-year financial planning and would direct resources to the EU budget.
A Commission official argues that the FTT is akin to the current system of getting revenue from customs duties for imports and exports because it has an equally broad base of activity all over the bloc.
Australia has previously eyed the FTT with suspicion and a Commission official travelling with the president admits that Barroso and the prime minister of Australia, Julia Gillard, still do not see eye to eye on the matter.
In New Zealand, the tax has more support from both political and business circles. The tax has curried favour among politicians in the Alliance, the Maori Party and the Greens who are using the measure as a pretext to drop the contested goods and services tax believed to hit those on low and middle incomes the hardest. The Maori party is currently a junior partner in a coalition government with the larger National Party.
However Singapore, a thriving financial centre which relies on low taxation, will be more difficult to convince. Barroso met with Lee Hsien Long, the country's prime minister, last Saturday to outline the EU's response to the sovereign debt crisis, including the possibility of an FTT.
Singapore, alongside other financial hubs in South-East Asia like Hong Kong, already employs an FTT of sorts on secondary trading in equity shares, and is reluctant to change its tax system unless there is a global agreement at the G20 which would extend its tax to a wider base of transactions.
The supporters of an FTT argue the tax is necessary to dampen speculative high-frequency trading, which has been blamed for increasing market volatility.
"High-frequency trading is driven and executed by computer programmes aimed at exploiting minor price fluctuations. The assets are often bought, held and sold in less than a second. No human mind is brought to bear on these individual trades, and the underlying real economic value of the asset being traded rarely influences the trade," said Australian Professor Ross Buckley, who is advising Australian NGO's on their campaign for an FTT.
"Because of the scale of modern financial market activity, a tiny FTT would raise somewhere between $75 billion and $500 billion annually, if applied globally," Buckley estimated in a recent briefing paper.
Claire Davenport
COMMENTS
This tax is the first step to world wide taxation, it will be legislated for by country intergovernmental agreement which will override domestic law'.
Here in the USA and Canada, we hope the EU passes the FTT. It will never happen here and we have plenty of faculties in New York and Toronto to house the mass exodus of financial firm from Europe.
time has arrived for for a global tax on transaction,but if a worldwide deal is not reacheable then the EU should and must implement it in europe,the money raised can be used to hel poor community instead of going to the few banker on bonuses.
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