EU to push financial transactions tax at G20 summit

Barroso August 2011_picnik.jpg

The European Union will push for the adoption of a financial transactions tax at a summit of the world's 20 biggest economies, the G20, in November, European Commission President José Manuel Barroso said on Wednesday (31 August).

G20 leaders are to meet in the southern French resort of Cannes in early November.

"Ahead of the Cannes summit, we will come out with a proposal for a European financial transaction tax and we are committed to explore this further also at the G20 level," Barroso said in a televised address. He said he would discuss the issue with Australia during his visit there next week.

Money from such a tax could also be used to help finance the European Union's long-term budget, Barroso said, adding the Commission would make appropriate proposals in the next months.

EU officials have indicated that the tax will be first introduced EU-wide and will be used as a stepping stone to convince G20 partners to follow suit. A financial tax, the argument goes, would help hinder speculation on the euro zone's sovereign debt and will have limited economic impact if set at a low enough rate.

"We know it will be difficult, we know there needs to be unanimity [among EU member states]," Commissioner Michel Barnier, in charge of the internal market, told members of the press recently.

France and Germany are already working on a joint proposal for such a transaction tax as part of a bilateral drive for closer economic coordination between euro zone states.

European banks have poured scorn on the idea of a financial transaction tax, a long-standing French proposal, saying it would not stabilise markets.

European Central Bank President Jean-Claude Trichet has said that such a tax would not work unless it is applied globally and Britain, home to the region's biggest financial centre, is also opposed to the EU going it alone.

EURACTIV with Reuters

The Financial Transactions Tax (FTT) is one of many proposals made to tax banks and hinder market speculation.

Many countries have already implemented a levy on banks' assets and liabilities. The European Commission and the IMF have also examined the possibility of a Financial Activities Tax which levies profits and bonuses.

In a bid to lower national contributions to the EU budget, the Commission also recently proposed to tap into an FTT. The Commission will make a full proposal for the tax in the autumn.

The UK is the staunchest opponent of the tax, arguing that the move will encourage bankers to route their business through tax havens.

  • Sept. 2011: Commission to present proposal for EU-wide Financial Transactions Tax (FTT).
  • 3-4 Nov. 2011: G20 summit in Cannes.

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