Introduction of transaction tax would bring 35 billion euros

The European Commission officially proposed on Thursday the introduction of a financial transaction tax in 11 European Union countries, which will collect 35 billion euros annually, and stated that this is just the first step towards introducing this tax across the entire EU.

The financial transaction tax (FTT) is intended to force banks to pay for taxpayer assistance during the financial crisis and will be introduced from January next year. It will amount to 0.1 percent on trading in stocks and bonds, and 0.01 percent on trading in financial derivatives.

The Commission’s proposal is based on a legislative initiative from 11 EU member states that represent two-thirds of the EU economy and have decided to introduce the tax despite the negative response from 16 other countries to an earlier corresponding proposal for the entire EU. The group includes France, Germany, Austria, Belgium, Estonia, Greece, Italy, Portugal, Slovakia, Slovenia, and Spain.

Attempts to introduce the so-called ‘Tobin tax’, named after American economist James Tobin who devised it in the 1970s, have failed worldwide due to American opposition. European Commissioner for Taxation Algirdas Šemeta warned that taxes imposed on the European financial sector are ‘too low’, estimating the shortfall at around 18 billion euros.
– This paves the way for the introduction of a common tax across the entire EU – he said during the presentation of his plan.

The Commission emphasizes that 85 percent of targeted transactions occur between financial firms, and that if some costs are passed on to consumers, it will not be ‘disproportionate’.
– Every citizen who buys, for example, shares worth 10,000 euros will pay only 10 euros in tax on that transaction – the statement reads. Pension funds will also be subject to the tax, but the amount will be ‘very limited’ if their trading in shares is small, it adds.