The European Commission officially presented its proposal for a Financial Transactions Tax (FTT) yesterday (28 September), to the acclaim of the European Parliament's largest political groups, trade unions and development NGOs. The business community and British Conservatives were among those who voiced their opposition in the absence of a global FTT.
Commission President José Manuel Barroso highlighted the proposal during his annual State of the Union address to the European Parliament in Strasbourg saying that "in the last three years, member states – I should say taxpayers – have granted aid and provided guarantees of €4.6 trillion to the financial sector. It is time for the financial sector to make a contribution back to society."
As proposed, the FTT – often known as a Tobin tax or Robin Hood tax – would tax the exchange of shares and bonds at a rate of 0.1% and would tax derivative contracts at a rate of 0.01%. The Commission estimated this would raise €57 billion in revenue each year, to be split between the EU and the member states.
The tax, which would come into effect in 2014, would affect all transactions where one party is within any of the EU's 27 member states.
Though the proposal was praised by a wide variety of stakeholders in Brussels (see 'Positions'), it faces numerous hurdles before it could be adopted. In particular, many in the business community and certain member states, notably the United Kingdom, have made known their opposition to a European FTT, fearing it would force the financial operations to relocate out of Europe.
Barroso has also been pushing for a global FTT to be considered at the upcoming G20 summit of the world's largest economies this November.
Algirdas Šemeta, European commissioner in charge of taxation, said "With this proposal the European Union becomes a forerunner in the global implementation of a financial transaction tax. Our project is sound and workable."
"I am confident that our partners in the G20 will see their interest in following this path," he added.