Socialists, Greens renew calls for ‘Tobin Tax’

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Taxing cross-border capital transactions could represent an alternative source of funding for the EU budget, and such revenue might also provide financial means to fight climate change, European Socialist and Green leaders have said.

“We should consider a new transaction tax at European level, a sort of second generation of Tobin Tax,” Party of European Socialists President Poul Nyrup Rasmussen said during a debate on the EU’s priorities for the coming years, organised in Brussels by the Bruegel think-tank. 

“It could be useful to fund the EU budget,” Rasmussen added. He also relaunched his long-standing call for EU bonds, which could help raise money on financial markets on behalf of the European Commission, thereby reforming the current funding system for the EU budget. 

At the moment, the Union’s budget is funded from three main sources: a percentage of the Gross National Income (GNI) of each member state, a percentage of the VAT revenue raised by each member state and its own resources, meaning the duties charged on imports of products from outside the internal market. 

Co-president of the Green/European Free Alliance group in the European Parliament Daniel Cohn-Bendit openly supported Rasmussen’s calls for a so-called Tobin Tax. “The only way out of the crisis is through taxing the circulation of capital,” he told the same conference. 

But for the Green leader, taxes should also be used to counter climate change. He renewed calls for “ecological fiscality,” reigniting the debate around a carbon tax to penalise heavier polluters while encouraging pro-environment attitudes. 

The main party in the European Parliament, however, is against these talks. “Taxes are not an EU competence,” European People’s Party veteran Elmar Brok told the conference. 

The current European Commission has on several occasions put on hold the ideas of reforming the EU budget and other ambitious plans without the support of member states. 

A tax on cross-border currency trading has been considered on many occasions by politicians worldwide after it was first proposed in 1971 by economist James Tobin, who won the Nobel Prize in 1981 for his work on financial markets. 

The tax named after him, the so-called 'Tobin Tax', is mainly aimed at limiting short-term currency speculation. Another old debate concerns carbon tax, which seeks to reduce carbon dioxide emissions to help fight climate change. 

Since the early 1990s, there have been several attempts to introduce a unitary carbon tax across all EU member states, but they regularly failed. 

France, however, recently set the ball rolling to introduce a carbon tax in 2011, anticipating support for Sweden's plans to make implementing such a scheme at EU level a priority of its six-month turn at the bloc's helm (EURACTIV 29/07/09). 

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