MEPs, NGOs hail Tobin tax proposal

In a joint press release, Socialists & Democrats Group MEPs Udo Bullmann (Germany) and Anni Podimata (Greece) said that through the FTT "the EU is giving much needed leadership to the rest of the world on this question."

"We are confident that concerns about the tax impact on competitiveness will prove to be unfounded - and we are convinced that other countries around the world will quickly follow the example given to day by the EU," they added.

The European Conservatives and Reformists Group – of which the British Conservatives are members – was critical. In reaction to Barroso's speech, the Group's leader and Czech MEP Jan Zahradil argued the EU's objectives for growth and competitiveness could not be achieved "within an old and outdated EU framework. So let's stop thinking of Mr. Schumann and Monnet - they were nice guys but their ideas are 50 years out of date. "

"One very bad decision is a Financial Transaction Tax you have mentioned. On the face of it, it sounds fine; a small fee on transactions. But in the real world such a tax will make financial institutions seriously reconsider their location - and they will leave the European market," he said.

British Conservative MEPs also reacted negatively. MEP Kay Swinburne, spokesman on economic and monetary affairs, said "This is not an EU-wide tax but a tax on the City of London."

She warned that in the absence of a G20 deal for global tax "Industry experts believe banks could switch as much as 30% of the value of their trades through Singapore and away from London without running into trouble from the regulators."

"The European FTT is an invitation to go elsewhere, and London will ultimately pay the price," she said.

German MEP and economic and finance spokesperson for the Green Group Sven Giegold said "Although long overdue, the plans announced today to introduce a European financial transaction tax are to be welcomed."

"The EU must push for this at different international fora: the G20, the forthcoming UN climate conference in Durban, next year's Rio +20 summit," he added.

Similarly, British Green MEP and president of Plaid Cymru Jill Evans (the Party of Wales) welcomed the FTT saying "It is time to rein in the banks which have been largely responsible for so much economic turbulence - the cost of which has too often been passed on to ordinary people."

"The ConDem UK government can no longer credibly maintain its opposition to this tax. I call upon them to work with the European Commission in implementing a fair financial transaction tax as soon as possible," she added.

BusinessEurope, Brussels' biggest private-sector representative, complained that Barroso's State of the Union speech sent a "mixed signal on growth". The organisation's president, Jürgen R. Thumann, said "the Commission has blurred its message by presenting a Financial Transactions Tax. Any such a proposal clearly needs to be agreed at G20 level to maintain a level playing field for European businesses and ensure financial services activity remains in Europe under our regulatory supervision."

Chas Roy-Chowdhury, head of taxation at the Association of Chartered Certified Accountants (ACCA), said the body "would prefer [the FTT] to be global rather than purely limited to one region of the world. Localised implementation would harm the local and regional economies affected."

"We believe that [a European FTT] would lead to even slower growth in the region and the migration of financial institutions to other financial centers of the world such as Hong Kong, Shanghai, Singapore or New York," he added.

Guido Ravoet, chief executive of the European Banking Federation (EBF) said "No taxation measure should be detrimental to growth, impede European competition and end up driving business out of Europe".

"In adopting a Directive, EU legislators need to carefully look at ways to prevent such a tax from seriously damaging the European economy," he added.

The EBF warned that it was "concerned that imposing a Financial Transactions Tax would also have an impact on the liquidity of instruments at a time when any additional cost on funding would be better avoided"

Bernadette Ségol, secretary-general of the European Trade Union Confederation (ETUC), praised the proposed FTT and pledged to "continue to work to ensure that this initiative is accepted by all governments across Europe."

"A Financial Transaction Tax will help crack down on speculation and on the high frequency, algorithm-driven share trading that has led to flash crashes and market volatility. It will make the financial sector pay a fairer share of the costs of the financial crisis that it caused."

Bernd Nilles, secretary-general of the international alliance of Catholic development agencies CIDSE, welcomed the FTT proposal saying "With this firm legislative proposal by the European Commission an important victory for justice and solidarity is in sight. The Commission has made a good serve and now the ball is in the court of EU member states. They must make it game, set, match by backing the tax."

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," he added.