Economy

Tax on financial transactions in Europe likely by 2014

Vidya Ram London | Updated on September 28, 2011 Published on September 28, 2011




A tax on financial transactions in Europe has come one step closer as the European Commission laid out plans for a levy that would come into effect in 2014. It would raise up to €57 billion a year, helping European nations refill their depleted public coffers.

In his so-called ‘State of the Union' address in Strasbourg, the President of the EC, Mr Jose Manuel Barroso, gave the policy an impassioned defense. “It is time for the financial sector to make a contribution back to society,” he said.

“It is a question of fairness.”

Under the proposals before the 27 members of the European Union, a 0.1 per cent rate of tax will be applied to the exchange of shares and bonds, while derivative contracts will face a levy of 0.01 per cent. Revenues will be shared across member States.

“I am confident that our partners in the G20 will see their interest in following this path,” said Mr Algirdas Semeta, Commissioner for Taxation, Customs, Anti-fraud and Audit.

In addition to boosting public coffers, EU officials hope the move will help strengthen the monetary union by harmonising rates across countries. “It was an illusion to think that we could have a common currency and a single market with national approaches to economic and budgetary policy,” he said. “For the euro area to be credible, we need a truly Community approach.”

In reality, however, the move will open up divisions within Europe. While France and Germany have been pressing for such a transaction, the UK Government has openly opposed any such tax that isn't applied globally. Last week, it emerged that Bill Gates, commissioned by the French President Mr Nicholas Sarkozy to make recommendations to the G20 on raising funds, will back the tax.

Published on September 28, 2011
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