Attac fought for the introduction of a financial transaction tax for more than ten years. Today another big step forward was made. The European Parliament adopted the Commission proposal from last year.
The EP has today given its clear endorsement to the Commission’s proposals for an EU financial transaction tax, marking an important landmark on the long road towards the introduction of the FTT. The Greens have long advocated an FTT both to help curb risky financial speculation and generate needed revenue for under-pressure exchequers (such as for development, climate aid as part of an EU system of own resources). In order to limit a shift of transactions outside the scope of the directive the Commission and the Parliament intend to levy the tax at the place of residence of the involved actors. Even transactions ordered outside the EU can thus become subject to taxation.
The Greens have proposed further practical measures to limit evasion and avoidance which have been adopted by the house. It is now up to the member states to finally make the FTT a reality and put the Parliament’s suggestions into force. Today’s vote is a big step forwards towards the goal we were focusing on during more than ten years. However, the Greens believe exempting pension funds from the FTT is not the right approach to take.
Ideally, the FTT should apply in the EU as a whole but we need to push forward with an agreement as swiftly as possible via enhanced cooperation with the widest possible group of EU members. If the UK government continues blocking the adoption of the legislation in Council against the will of a majority of the European population (this includes a majority amongst British citizens) other countries must form a coalition of the willing and pursue the introduce the speculation tax with a broad base.
Civil society’s, unions’ and churches’ vital pressure must be upheld during this final critical phase so that our common aim to hold the financial sector liable and insist on its fair contribution to the cost of the crisis can be reached in a timely manner.
We have summarised our Green keypoints of the legislation here.
The Commission proposals can be found here.
The Parliament’s adopted amendments can be found here.
Keypoints for the Green Group
- The residence principle as proposed by the COM is considered not tight enough to avoid evasion, hence we suggested to complement it with the issuance and ownership principles as suggested by several academics supporting the FTT. The proposal was broadly adopted.
- On the use of the revenue: We made sure that the final report would give a positive signal for the financing of global public goods such as development cooperation and the fight against climate change. Furthermore, our demand that the revenue shall flow to the EU budget rather than national budgets is covered by a somewhat neutral reference to the own resources proposal.
- The COM excluded on legal grounds (but with no convincing legal expertise transmitted) currency spot transactions which means taking the Tobin Tax out of the FTT. Nevertheless, presenting differing legal opinions helped us to convince the members to include the Tobin Tax.
- Enhanced cooperation: Given the difficulties in Council to agree at the EU 27, level, the Parliament report, gives a positive signal towards enhanced cooperation.
- High Frequency Trading (HFT): The European Parliament has accepted our demand for covering canceled transactions in the review clause. HFT is of course covered if transactions are executed – which is key to regulating financial markets – but much of the casino game consists of placing huge numbers of orders and retracting them.
On the negative side
The EP suggests to exempt pension funds. In the compromise negotiations we suggested to grant a transition period within which pension funds could have adjusted their investment strategy in view of long term investments, but this was not acceptable to EPP and ALDE (given the substantial propaganda on this in various Member States). It is important to highlight that according to a recent OECD study, between 2008 – 2010 pension funds with conservative investment portfolios (generally correlating with low transaction frequency) performed better, i.e. the FTT would incite pension funds to follow strategies with higher returns!
The attempt of conservatives and liberals to exclude all investment funds (UCITS) from the scope of the FTT could be prevented by a left majority.