Taxation of financial transactions (debate)
The next item is the oral question to the Commission by Sharon Bowles, on behalf of the Committee on Economic and Monetary Affairs, on the tax on financial transactions - B7-0019/2010)
author. - Mr President, the ECON Committee has put forward this question and resolution because some careful thinking has to be done. Last year, the committee discussed financial transaction taxes with Commissioner Kovács, who, like many, said he found the idea attractive, and we made it clear then that it would be a good idea to investigate how it would work, including the infrastructure for it.
Since then, the Commission has been investigating the subject, and we are highlighting here the large range of questions needing to be answered. There have been calls, including in the G20 last September, to make the financial sector pay for setting up stability funds and recompense for the damage that they have caused to the real economy. President Barroso has suggested using a global financial levy to fund environmental projects. The original Tobin Tax idea of using a financial transaction tax for development aid has also strongly resurfaced.
It is not the intention of this resolution to bring pressure to bear in any one direction, other than for answers and impact assessments, but, of course, we have many who are strong advocates of transaction taxes and many who have equally strong reservations about them. Nowadays, it does seem highly likely that the collection of a transaction tax is easier, even at international level, given the electronic nature of many transactions, but it is also impossible to ignore the fact that there are more alternative competing destinations for the proceeds of any tax.
One idea concerning the tax is that nobody would notice because it is so small in each instance. On the other hand, others suggest it should be used to deter excessive transactions. It seems to my committee that if the end amount collected is large - and the sums suggest so - then somebody somewhere will actually be paying. Many financial transactions are intermediate, not like end sales, so the intermediaries - banks and the like - will bear the tax. But surely the extra costs - for that is what they are - will simply be passed on to the end user. Some may say that does not matter. However, there are also other ways that taxation could be raised within financial services.
Then there is the question of who is to collect the tax and who is to decide how it is used. Here, there is even the 'no taxation without representation' issue. If the tax is collected in London for a derivative transaction that is uncosted, to somewhere else in the world, who says where to spend it? This question may be easier to answer if it goes to a financial stability cause in which the payers are obviously participating than if it is to go outside the financial sphere, such as to environmental projects or development aid. All these things have an international element, both on the paying side and on the spending side. We probably cannot do all these things and have all these benefits, so at the very least, choices have to be made about what we are trying to fix, the method by which it is to be done, and the primary purpose of the tax.
Finally, indeed, are we right to mix regulation with tax-raising? Are these truly complementary?
Member of the Commission. - Mr President, I am happy to contribute to this important debate on the innovative financing instruments and answer this oral question.
Regarding the options for the introduction of a general financial transaction tax, the Commission intends, as announced in its EU 2020 strategy, to contribute to the debate on innovative financing at global level.
It is currently working on defining and assessing different approaches, one of these being a general financial transaction tax (FTT). The 'financial crisis responsibility fee' proposed in the US and the 'stability fee' on certain assets of banks, as introduced in Sweden, are other ones.
As far as the FTT is concerned, it is clear that the options today differ from the initial discussions on the Tobin Tax, as it would cover a broader base of financial products.
Concerning the advantages and drawbacks of the introduction of the general FTT, the Commission believes that, in assessing the different instruments, it is important to avoid the accumulation of initiatives that could be detrimental to the financial sector, and to ensure that the new initiatives do not result in the relocation of transactions to other regions, which would have a negative impact on Europe's competitiveness.
Regarding the possibility of implementing a general FTT in the EU if our main partners do not introduce such a tax, I would like to remind you that the IMF is also, in parallel to the work of the Commission, examining options, including a global financial transactions levy.
This demonstrates that the subject is of a global nature and the Commission believes that the best way to tackle this issue is to find global and coordinated solutions. This is our first and preferred option.
Concerning the use of tax as a complementary regulatory tool in the context of financial market reforms, I can confirm that the Commission is considering complementarities between the tax and regulatory instruments and will pay attention to the cumulative impact of these two types of instruments on the ability of the financial sector to support economic recovery.
Regarding the possibility of making the financial system long-term oriented with the introduction of a general FTT, the Commission is not aware of clear data or studies on the relationship between such a tax and the maturity structure of financial intermediation.
Concerning the allocation of revenues generated by a FTT, as the analysis on innovative financing is still ongoing, I think coming to any conclusions about revenue sharing and allocation would be premature. Let me, nevertheless, emphasise that the potential revenues of a general FTT would be very asymmetric, probably located in only a few countries that have the largest financial centres. This asymmetry points to the need for global solutions, including about the sharing and allocation of revenue.
Finally, the timing of the different initiatives. As a first step, the Commission's services are currently examining the issue of innovative financing instruments overall. The Commission will also take into account the conclusions of our main international partners in order to identify the options with the most potential. It is on this basis that, in a second step, concrete proposals with a detailed impact assessment might be launched, in line with the Commission's standard approach on better regulation.
Mr President, Commissioner, ladies and gentlemen, the financial crisis we are experiencing has forced public authorities to intervene financially using public money.
Under these circumstances, it is tempting to consider the implementation of a tax on financial transactions. The income from this tax would be used, for example, to finance the recovery and to develop a sustainable economy, and could initially serve to offset the cost of the crisis borne by the real economy and the taxpayer. This tax would be added to the regulations governing the financial sector, the elimination of tax havens or even the regulations currently being drawn up for derivative products.
At this stage, it would be advisable to evaluate the effects of a tax on financial transactions. That is the main purpose of this oral question: to encourage the Commission to examine in practical terms the various points listed in the draft resolution in order to give an opinion on the feasibility and timeliness of such a tax.
Commissioner, what you have just said is a step in the right direction. It should, however, be stressed - as you have done - that this measure will have to be approached in a realistic and pragmatic way. Such a tax must not be harmful to the European economy or to the competitiveness of the European financial industry.
More generally, it is important to underline the consequences of implementing this tax in the European Union alone, as some people are advocating, if no agreement were possible at international level. We believe that this sort of purely European solution cannot be countenanced.
Mr President, Commissioner, I would like to chip in with a few questions on what Mr Scicluna has stated on behalf of the Committee. Commissioner, if there are 70, 80, 90 or 100 times as many financial transactions in the world as gross national product, and if this development is becoming ever more dynamic, would you then say speculative elements are, for the greater part, linked to this explosion of financial products? If so, how do you then plan to curb them, or what might contribute to curbing them? If short-term financial transactions increase more and more relative to gross national product in the world, do you then share our view that we must strengthen the long-term approach in the real economy, where people work, earn money and manufacture products that we can consume and that we can use. If you share this opinion, by what way and means do you believe will we then be able to achieve this?
Commissioner, if the tax on financial transactions can make a contribution to this - that is what we want to look into - what would the timeframe be for negotiating this with international partners? We have the impression that the financial instruments that were created in the world are being used right now to speculate against the euro area and against the euro and to act against the weakest Member States. Is it not high time now that we dealt with this and define a European approach?
Commissioner, there is one thing I cannot understand, namely why we are urging Member States to raise value added tax by three or four or more percentage points, when a transaction tax of 0.01 or 0.05 percentage points will supposedly ruin competition and weaken Europe's position. I cannot believe that. Take action. That is what Parliament wishes.
Mr President, as we have heard here in the Chamber, the so-called Tobin Tax has been dusted off and brought out again recently as a result of the economic crisis and the increasingly troubled discussions about climate change.
We have also heard that there are high hopes of this tax, which is intended, among other things, to create security on the financial markets and to generate income that can be used to fund a variety of deserving causes, such as development aid and combating climate change.
In my opinion, these hopes are relatively naïve and I am very sceptical about the possibility of introducing a tax on financial transactions that really works. On the one hand, I am one of those who doubt whether it will be possible to implement the tax in practice. On the other hand, I do not believe that it will have the effect that some people are hoping for. Among other things, I am fully convinced that no tax in the world could have prevented the financial crisis which we have experienced in recent years.
Personally, I am also critical of the idea of taxing something and then using the taxes raised for a purpose which has nothing to do with the activity that is being taxed. I believe that this is illogical and not a particularly sound tax policy.
Please do not misunderstand me. I want to see more funding made available for development aid. I am a critic of my own country, which has not managed to reach the level of 0.7 percent of GDP that is often regarded as a minimum.
The Committee on Economic and Monetary Affairs has produced a balanced document on this subject. It is good that a proper investigation is being carried out at EU level into how a tax like this could work. After this, I hope that there will be more facts and fewer political opinions in this discussion. Otherwise, we run the risk of becoming bogged down in a debate about a tax which is impossible to put into practice while, at the same time, failing to find opportunities and solutions for raising sufficient funding for development work and our efforts to combat climate change.
The worst thing that could happen would be for the EU to attempt to introduce this kind of tax on financial transactions forcibly and for ideological reasons, without the rest of the world doing the same thing. This could only lead to an economic fiasco for Europe which is hardly what is needed in times like these. We must bear this in mind. I hope that the investigation will be both serious and effective.
(The speaker agreed to take a blue card question under Rule 149(8))
Mr President, I am trying out the new rule we have so that we can use our blue paper.
I was interested when the previous speaker was talking about their own country, about the reservations that they had, and they were talking about the 0.7% GDP and the Tobin Tax.
Obviously the Tobin Tax is quite different from the financial transaction tax and this is where the confusion often is leading. I think you are absolutely right that we need to get clarity, but maybe I would like you to go into a little bit more depth about maybe why we are not fulfilling the 0.7% and also about how we can get clarity about what we are trying to get here in terms of a transaction tax that actually works.
Mr President, this new way of discussing is actually quite interesting. It gives us the possibility to have a dialogue.
Finland, unfortunately, is a country that does not put 0.7% of its GDP into development aid, which is a bad thing. That is something that we should handle politically in our country. It is a shame though that our government has not been able to do that.
When it comes to the Tobin Tax and the financial transaction tax, you are right: it is probably something which is not exactly the way that Mr Tobin figured it initially. I am still very sceptical as to whether we could actually have a tax that would globally work, with all countries globally coming in, because that is the only way it would actually work without moving capital elsewhere in the world.
We will see, however, which is why we have the Commission looking at this. It is going to be interesting.
Mr President, Commissioner, our public finances are in a situation of crisis and we know that part of the solution may lie in reducing some spending, but that a large part of the solution is in Member States' ability to raise more funds.
The issue at stake, therefore, is knowing what type of tax may be increased, what type of tax must be increased, and what the consequences of these tax increases will be. The Group of the Greens/European Free Alliance estimates that it would be difficult to significantly raise the taxes paid by small businesses, which create the majority of jobs. It is difficult to increase the taxes paid by families - with the possible exception of those paid by the richest - because in the majority of cases, these are already high enough, particularly in Europe.
The question, therefore, is: which taxes should be increased? If taxes on small and medium-sized enterprises are not increased and nor is VAT, other possibilities will inevitably have to be sought. We estimate that a tax on financial transactions is, in the end, the least painful tax for the European economy. It is the tax with the least negative consequences for the global competitiveness of the European economy.
Moreover, the cost of financial transactions has diminished enormously over the last ten years or so, both because of a certain number of technical improvements - if they can be called that - and because of European regulation.
In fact, these reductions in costs have been entirely absorbed by the financial industry and the banks. It would not be totally unjustified if, by means of a tax on financial transactions, part of the profit saved by the banks from these decreased costs made its way back to the public authorities that saved them.
As is always the case, this House is turning this into a very ideological debate, but it is actually quite technical. Transaction costs existed before; they have been reduced. Today, we are proposing that they be increased again in order for public authorities to benefit from these technical improvements and not just private actors.
Naturally, the issue of whether the European Union can take this step forward on its own is being raised. It is clear to everyone that it would be better if this were done within an international framework. If others - specifically, the United States - do not follow our lead, the following question arises: is the European Union's prospect of achieving this then ruled out?
Some statements - for example, that of Mr Gauzès - suggest that the Group of the European People's Party believes that Europe can do nothing on its own. That situation would not, of course, be perfect and there would be obstacles to circumvent. Does that, however, mean that the European Union should necessarily position itself at the lowest common denominator, that it should have the least possible regulation, and align itself with the least ambitious actor? That does not seem to us to be the sort of thing that will strengthen the European Union's position of leadership in the world.
Furthermore, it is possible to imagine the European Union putting this transaction in place on its own. This is quite simply because the capital flows that concern us start out in the European Union, then may move elsewhere, only to return to the European Union.
When these flows leave and return, we have the opportunity to demand that they can be traced, and to know whether or not they have been subject to this tax on financial transactions. If they have, no problem. If they have not, then we can deduct an entry or exit tax. We have done so for years in the real economy with the Common External Tariff. Financial globalisation is now obliging us to do so in the financial sphere of the economy, and it is entirely possible from a technical point of view. What is needed is the political will.
on behalf of the ECR Group. - Mr President, following on from the recent turmoil in the global financial markets across the world, academics, politicians and Nobel Prize-winning economists are rightly looking into finding a way to recoup the money which has been spent saving our financial institutions. Financial transaction taxes, in their many different forms, are just one of many ideas on the table and we must not limit the tools available to the EU and its Member States to looking at one idea. We must be creative and look as widely as possible to see where we can best respond to the financial crisis and strengthening our national financial systems. President Obama's concept of a levy on financial institutions could bear some merit.
Yet this proposal is very specific and does not look at considering all other forms of financial taxes or levies. As the Commissioner has said, the IMF, under the instruction of the G20, is currently doing a study into possible financial taxes, yet this resolution appears to seek answers ahead of this study.
I do not understand the logic of trying to implement an EU solution to a global problem. It is nonsensical and naive to think that, if the EU were to implement a transaction tax without the support of all key global players, we would not lose out to other countries.
My concerns are twofold with this financial transaction tax resolution as it stands.
Firstly, we cannot support a measure which seeks to give tax-raising powers to the EU. It is fundamental to the sovereignty of our EU Member States that they retain the right to control their own tax systems. It would be useful, therefore, to clarify whether this proposal is for coordinated tax-raising by individual Member States - to be retained and used at that level - or whether it really is an EU tax.
Secondly, the taxes raised to stabilise financial systems should not, in my opinion, become an extension of an EU budget line. There are many EU- and Member State-led initiatives and spending programmes looking to tackle the global climate in smart ways. We have ambitious targets of money to be spent in developing countries. I would not be able to support something that actually raises taxes for other purposes.
Mr President, I believe that the technical discussion in which we must engage is undoubtedly very important, but it must not hide the fact that the choice facing us is of a political nature. Therefore, conducting and building the whole argument on a technical basis to avoid having to make the political choice is somewhat lacking in legitimacy.
Mr Haglund, for example, explained that if we had the Tobin Tax in place, we would not have avoided the financial crisis. I can agree with him, but we would certainly have a lot more resources to fight the effects of the financial crisis in our economies and on the most disadvantaged sectors of the European population.
This, therefore, is the issue at stake here. And the second aspect concerns ... and this is why Commissioner Šemeta's answer did not convince me at all, either in terms of the schedules, or in terms of the basic issue. Ultimately, what Commissioner Šemeta is telling us, as well as Mr Gauzès, is that the tax is an appealing and very interesting idea, but that we cannot apply it on a European scale. It must be worldwide.
Let us be clear. Saying this is saying to people that the Tobin Tax will never exist on a global scale. Therefore, there is no point in deceiving people here. What is being said is that either it is global or it is not going to exist. What is being said, therefore, is that it is not going to exist. I have an entirely different view. I believe that the European Union is a sufficiently strong financial market for a general residual tax on all transactions to be created without capital flight.
However, above all, we would be telling our citizens something absolutely decisive: that, in this crisis, at least on a residual level, the financial capital that led us into the crisis, at least on a residual level, must pay. And that this was essentially and specifically intended to fight global hunger and poverty and to begin financing the establishment of a social pillar in the European project, the pillar that we are missing and that we do not have.
Citizens would understand this very well.
(DE) Mr President, eleven years ago, I was one of the handful of Members who cofounded the cross-party Tobin Tax working group and our meetings were often met with a contemptuous smile. From the perspective of the turn of the millennium, we referred again and again to the apparent rationality of the market, to the risks for competition and possible cracks in globalisation.
It is no good if today, you continue to put forward these arguments. We have only just avoided a major crash, and that not only cost an awful lot of money, but also a lot of trust. If you now think we can slow down a little with such a financial transaction tax, then the speculators - as I will call them - that I personally have got along well with, in other words, investment fund managers as they are euphemistically called, have an entirely different view, because they are conducting their business along this dividing line ever more quickly and intensively.
That is why I am not convinced that a financial transaction tax on the volume of financial transactions would achieve anything more than the damping of these enormous speculative waves. I would really like those of you from the Commission and national governments to take heed, above all, of the words of our Green colleagues, but also those of Mr Bullmann and the Left. It is a political question; the technical aspects can be resolved quickly, as there are experts for that.
Mr President, one can question if, from an administrative point of view, it is possible to launch a financial transaction tax, or if it is politically possible, but I think the fundamental question must be: is it good? Is it useful for economic development to have a tax on financial transactions? Because this means that you will have a tax on investments; cross-border, you will have a tax on investments in countries where you have less capital than in others.
Will this help international trade or will it reduce international trade, if it has an impact?
I say this because there are two examples we could look at when we discuss this item. Firstly, we have 30 years of enormous economic growth thanks to well-functioning global financial markets. Then we have seen the consequences of the crisis giving us the credit crunch. I think that we should have more affluent and functioning global financial markets rather than trying to get anywhere close to what is a credit crunch.
Because a transaction tax, just like every tax, aims to reduce the volume of what is taxed, and I do not see a benefit in reducing the amount of international trade because we have seen the consequences when that has happened. I cannot see that making investments in poor countries more expensive is useful.
Taxing financial transactions will not hinder financial transactions. It will not even hinder what are sometimes called speculative investments. It will hinder the big flow of normal investments and trade that we are in need of.
And I think, Commissioner, there is every reason to be careful and hesitant when we discuss this item.
(FR) Mr President, Commissioner, it seems that you, Commissioner, are responsible for taxation and that your contribution to the 2020 strategy in that area will be to propose an innovative type of taxation. Coming up with innovative types of taxation requires courage and you should not brush aside all the intelligent and constructive work done by your predecessors. I note that the 2020 strategy does not even mention harmonisation of corporation tax; perhaps you left it in a drawer somewhere. I suggest that you take a slightly closer look at that.
If, however, you demonstrate that same courage regarding the tax on financial transactions, we will not get very far. Within the European Union and the Commission to which you now belong, the conclusions of the G20 seem to be gospel. The tax on financial transactions figures in the conclusions of the G20, so we are asking you to implement them. Please do not present us with the argument that we need to do what everyone else is doing, because when President Obama, under the influence of Paul Volcker, proposes reforming the United States' banking system, he is turning his back on the conclusions of the G20!
Why would we rule out a method which could be good for the United States? All the more so, Commissioner, because I note that your colleague, Mr Barnier, said that this reform could be well suited specifically to the American situation and have nothing to do with Europe; that Europe had its own path to follow in the area of a tax on financial transactions. That is true. We await your courageous and innovative proposals, Commissioner.
(FR) Mr President, Commissioner, to be perfectly honest - and everyone knows that I fully support the Commission - your proposals seem singularly timorous. None of them demonstrates a desire to be politically ambitious on a subject that, nevertheless, seems to me to be very important.
I remind you that the 2002 Monterrey Consensus and 2008 Doha follow-up conference recommended innovative and alternative financing in the field of development. I do not believe that this tax on financial transactions could regulate the world financial system either; it is not about that. I believe that the European Union - alongside the G20, certainly - must take the initiative in launching a tax on international financial transactions that could be set, as has been said, on a scale between 0.01% - what a lot of money! - and 0.1% of the value of the transaction. The expected revenue varies, obviously, on the basis of these two coefficients. You can choose between USD 20 billion and USD 200 billion.
It can be of a global and general nature. However, there is a point on which I am not in agreement with you at all: I do not believe that its implementation should be the subject of an agreement between every country in the world, but between the key economic players instead. We must not wait for the whole world to accept this tax, as we know full well that would, in fact, kill off the very idea of it.
It should be levied at the state level and voluntarily at first, which would, of course, give the idea some impetus. It should be coordinated by the key economic actors, in particular, the G20. As you are wondering what it could be used for, one alternative would be for it to be paid into a global or even a European fund; the European Development Fund could really do with it as a means of providing public development aid. Alternatively, states could make use of it in their development policies.
There is also something else about which I have serious doubts and, moreover, that seems to be the way things are going. A clear indication, for example, would be when I hear the Managing Director of the International Monetary Fund more or less dismissing the philosophy of the Tobin Tax, or tax on financial transactions, as a sort of blanket, anticipating or covering the risks of the financial world - what I call financial jugglers. That is not what it is about at all! I do not want the purpose of this tax to be to cover risks taken by the financial world. That must be paid for another way. That is a misappropriation I cannot accept.
I would like to remind you that all the progress recorded in the last few years in a certain number of developing countries - even those that are doing best - will probably be wiped out, preventing the Millennium Development Goals from being achieved. I am, therefore, a fervent supporter of a tax on financial transactions.
Mr President, there are obviously many good reasons to ask financial institutions to contribute more to tax revenues post financial crisis, and it is a shame that this resolution only looks at transaction taxes and not at examples like the Obama levy.
On transaction taxes, I have three areas of concern.
Firstly, the impact on end-users of financial services. In the UK, the stamp duty that has existed for many years has had a disproportionate impact on smaller investors and companies seeking capital.
Secondly, the impact of the EU going it alone. We know financial markets are global and very fluid. There is obviously a risk that we just push transactions outside the EU, which would not be beneficial.
My third concern is regarding moral hazard: if this money is to be put into a bail-out fund. I do not believe that every failing financial institution should automatically be bailed out by taxpayers. It must be possible to allow a bank to fail whilst still protecting customers. Experts have warned both the Committee on Economic and Monetary Affairs and the Special Committee on the Financial, Economic and Social Crisis that such a fund could encourage irresponsible risk taking. We do not want to risk more risk, and this should be investigated.
(EL) Mr President, there can be no doubt that the recent financial crisis has shown that the liberalisation of the financial markets and insistence on the freedom of the market has allowed the financial system to grow dangerously large in relation and in correlation to the real economy and to operate for years on the basis of massive profitability, unaccountability and no regulation, ultimately leading to the crisis.
The proposal, therefore, for a tax on financial transactions could limit the size of the financial system and make certain speculative financial options unprofitable. However, this measure will be dead letter unless it is accompanied by an integrated plan for regulating the financial system, so as to minimise the abusive policies applied by banks and speculation by hedge funds and credit rating firms which are exacerbating and exploiting the economic problems in numerous countries.
Nonetheless, in my opinion, any such measure should not simply be considered a temporary measure. The banks must pay off the massive support packages which they have received from European governments, packages which ultimately increased the financial deficit in those countries. These countries are now being forced to borrow from the same banks, thereby paying them twice.
We must be clear. The banks must pay off their debts to government. That is why, apart from anything else, we need to impose a tax on financial transactions, firstly in order to limit the size of this financial sector and, secondly, in order to save resources for new social and development policies.
(DE) Mr President, Commissioner, ladies and gentlemen, what is this all about then? The question is quite simply how can the financial markets help to reduce the costs that they have incurred for states, societies and the economy? That is the crucial question that we must answer.
I think that together, we have developed a very balanced text. I am also very grateful to the Commissioner for the way he has worded it. On the one hand, we cannot pretend that Europe is the Island of the Blessed where we can do what we like without the global financial markets reacting to it. Things must be coordinated internationally. On the other hand, we must also ensure that the sector makes an appropriate contribution to overcoming the crisis.
That is why I would caution that we must stop coming up with a new item every week that we can use to solve all the problems of the world. A couple of months ago, it was an additional levy on airline tickets that was going to solve all our problems, now it is the tax on financial transactions and next month, somebody will think of something else. That is going too far. It is a question of involving the financial markets in an internationally coordinated manner. If a sensible solution to this can be put forward by the Commission and introduced into international negotiations, then we will be on the right track.
We should also be honest with ourselves. Those who maintain that we can stop speculation with such instruments are clearly deluding themselves. What we want is for speculators to make their contribution to the risk and to overcoming the risk. That is the right approach. In doing so, you have our full support Commissioner.
Mr President, in the UK at the moment, a campaign called the Robin Hood Campaign has been launched involving NGOs, churches and civil society, and fronted by the actor Bill Nighy. Commissioner, if you have not looked at their website, I would highly recommend it to you as part of this debate. The basis of the campaign is a financial transaction tax at 0.05%, which they believe would raise something in the region of GBP 37 billion.
So the financial transaction tax is not about people going to a cashpoint and withdrawing money: this is about non-public transactions and it is about those who have contributed to the financial crisis giving something back. If I put that into perspective, I listened to John Kay the economist about three weeks ago; he came to Scotland to speak, and if Scotland had been an independent country and our banks had collapsed, each man, woman and child in Scotland would have been liable for GBP 750 000. Now we cannot allow that to happen in the future. It has not happened at the moment, thank goodness, because we in Scotland are part of the United Kingdom, but in the future, we must look seriously at the financial transaction tax and look at how it would be applied.
The Robin Hood Campaign is an interesting one and I think there should be an 80:20 split within it; 80% going to public services and 20% to making sure we have a fund to ensure that the banking crisis does not happen again.
Thank you, Commissioner, and I look forward to your proposal. Maybe you could give us a time-scale on when we will hear what your opinion is. I know that the EU 2020 will come forward in April, but it would be good to hear your time-scale.
(FR) Mr President, Commissioner, in the current crisis, there are only two choices before us. The first is to make the people pay for the crisis, as we have been doing: through austerity plans, unemployment action and tax rises like the recent increase on VAT in Greece. The other is to tax speculative capital movements and financial transactions. That would generate considerable revenue for the European economy and I believe that it would be a weapon against the financial crisis that we are currently experiencing. It would also be necessary to have the courage to close tax havens.
This suggestion is in no way revolutionary, since it is already included in G20 agreements. Some of these principles were even debated and voted on here, but it is urgent that we go further than making aimless proclamations. We must put an immediate end to this lethal speculation. In fact, several economists believe that if we applied a low tax rate of 0.5% to financial transactions, it would make a further EUR 500 billion available to the European Union. That is money that we could use for a recovery based on work, training, research, salaries, and new environmentally friendly, industrial and agricultural policies.
We need, therefore, to start taking action. We need to have the courage to vote for the principle of such a tax and to then implement it.
(DE) Mr President, Commissioner, ladies and gentlemen, in the Austrian Parliament and in the Austrian Federal Government, as well as in my party, the Austrian People's Party, there is broad political will to campaign for a financial transaction tax. The financial and economic crisis has global repercussions, as well as causes, which cannot be reduced to one continent.
We do not need just global governance mechanisms; we need global supervision mechanisms, global regulatory guidance mechanisms and also sources of funding. However, the question of sources of funding is not enough. The effects of guidance are equally important.
First of all, we need a common European will, a European project, so we can also be successful globally. The question to the Commission and the resolution, which I hope Parliament will pass on Wednesday with a wide majority, are an expression of the joint political will to develop and implement - preferably on a global scale - a model for a financial transaction tax. I look forward to receiving a very concrete proposal from the Commission that will contribute to this solidarity in Europe, and I expect the Commission to present this proposal as soon as possible, as well as an answer to our questions.
What impact will such a financial transaction tax have on the real economy and on the competitiveness of the economic and financial position of the European Union? What should it be levied on, how high should the percentage be, who levies it and who receives the money? Should there be earmarking? I would say yes, but what for? We must resolve all these matters. With today's debate and the vote on Wednesday, we are setting the course. Please give us an answer quickly.
(ES) Mr President, Commissioner, the crisis has shown that the European Union lacks the necessary instruments to counteract the effects of the former and provide an appropriate framework for economic recovery.
It is therefore necessary to formulate a common response. This should involve not only coordination of Member States' strategies, but also equipping ourselves, as a Union, with appropriate instruments empowering the Union to take meaningful action so as to provide an immediate and global response.
The first objective should be to equip the Union with more far-reaching and more effective economic governance, which calls for greater financial autonomy. In this context, a tax on financial transactions designed to fulfil a triple purpose could be very helpful. After all, we need to enhance the Union's capacity to develop its own policies, we need to improve economic stability by limiting speculative operations, and we need to provide the information required to monitor the condition and evolution of financial markets. In addition, when designing this fiscal instrument, provision should be made to ensure that the financial sector makes a contribution to help repair the damage to the real economy and cover the expenditure and cost of stabilising the banking system.
Commissioner, can you provide us with a timetable for this?
(PT) Mr President, the European Parliament is right to present a set of questions on this issue and not to give a final position on the new tax on financial transactions.
There are, moreover, several reasons for that. You only have to listen to what the indefectible supporters of this tax have been telling us. They say that it is a political problem, that the technical solutions hardly matter.
Firstly, let us go ahead with the tax, and then we will see how it is going to be implemented. It is a mistake. It is not possible to solve the problem of the financial crisis with ideology.
Secondly, they say this would be a tax that might help the most disadvantaged, a kind of Robin Hood tax, since the most advantaged overcome their situation with the growth of the economy.
The issue of European or global scale hardly matters. It also avoids resolving the issue. What would happen if only Europe had this kind of tax?
There are several elements that must be taken into account. In a time of crisis, it is not by means of a new tax that one can solve any problem. It is not by means of a new tax that we will solve the problem of public finances. It is not by means of a new tax that works as a kind of penalty tax, a punitive tax, a tax intended to punish those responsible for the crisis.
End consumers are the ones who suffer with a new tax. Those in need of credit are the ones who suffer with a new tax.
Secondly, there is a series of technical problems to discuss. Those that do not matter. Is there one European administrative system that might implement a tax such as this one? Can anyone tell us the cost of this implementation? Can anyone tell us what its effect on liquidity and credit will be? How is a global tax going to be applied with time differences and transactions by the second? How can all this be controlled?
All these questions are still to be answered. It is my view that we should learn from a crisis and adopt positions. I doubt the new tax is the right one.
(EL) Mr President, Commissioner, the debate on the imposition of a tax on international financial transactions may not be new, but it is extremely topical today, because the basic lesson from the crisis in the global economy, especially for the euro area, which has been subject to systematic attacks by speculators recently, is that the previous unaccountability of the financial markets and the lack of fundamental financial regulation and governance is having immediate and visible repercussions on the real economy, on the viability of public economies, and on social stability.
Within this framework, the imposition of a tax on international financial transactions is especially important, because it is one of the key points of the long-awaited restructuring of financial control mechanisms. The solution, of course, is not for us to introduce yet another European tax which will have dubious repercussions on the competitiveness of the European economy, but to formulate an ambitious European proposal to be put to the G20.
Mr President, financial markets are global and financial companies are global; indeed, the financial industry is the biggest global sector at the moment. As our needs are global as well - such as the development agenda, the Millennium Development Goals or tackling climate change - to me it is more than natural that financial transaction taxation should be the first attempt at global taxation.
Politics is not global; nor, as we know, is it properly European Union. Someone has to take the lead in tackling the issue, and it is quite naturally the European Union's place to take the lead. Usually the one that takes the lead - developing the mechanisms, the models, having the intellectual property - has the leverage, and the advantage of being the first as well.
While there are slight benefits in terms of slightly curbing most speculative transactions, in my opinion, the biggest benefits relate to entering the new field of taxation, a global mechanism and gathering resources - not so much in the financial sector, but especially for our European and global development and environmental needs.
Indeed, to be active on this issue, the European Union has to have clear thinking, we have to have a united position, and that is why I would like to see the Commission come forward with a proposal very soon on how to make this FTT workable.
Mr President, it has been no less than 40 years since, as students, we discussed a new international economic order, one part of which included a proposal to use special drawing rights (SDR) loans to the IMF and to include a sort of tax on national governments which would be used for helping poor countries. This, as we know, did not materialise.
Many years later, realities have changed: globalisation, together with the advancement in technology and the stronger political will, has made certain plans more doable. The number of global policy objectives has, however, increased. Besides poverty, which unfortunately is still with us, we are also concerned with global environmental problems like climate change, and now we are essentially talking about a sort of global insurance premium to compensate victims for the social and economic pain caused by financial catastrophe.
We have to be careful when faced with multiple objectives. I suggest that we abide by the wise rule, that we ensure that for each objective, we need a separate instrument. Let the Commission be bold, but we must ensure that the financial transaction tax must be very focused and doable. Let us not try to make it all things to all people.
(RO) I believe that the introduction of a financial transaction tax will be of absolutely no help at all. It will not help to get us out of the financial crisis, nor will it help prevent a new crisis, nor will it contribute to the stability of the financial markets. This measure would only result in raising the cost of capital and credit and would put a brake on investment.
Before introducing a new tax, the European Commission must examine very carefully the pros and cons this tax will entail. If the decision is made to introduce a levy on financial transactions, this may affect the competitiveness of the European economy globally. Double taxation must also be avoided, as well as the creation of obstacles blocking the free movement of capital.
The costs arising from such a tax must not be borne by ordinary citizens. It would be appropriate to consider introducing this kind of tax in countries where there are accumulations of speculative capital, resulting in the creation of short-term external debts. This measure could prevent the accumulation of speculative capital.
In 2009, Sweden introduced an annual stability fee to be applied to banks and credit institutions amounting to 0.036% of the total of certain liabilities. However, the implementation of such a tax is not justified in Romania. In the context of the negotiations conducted between the Romanian Government, the IMF and European Commission, legislative amendments were agreed on the special administration procedure to allow the National Bank of Romania to intervene rapidly and effectively when a credit institution is in difficulty.
Against this background, I would like to ask the European Commission what mechanisms or formulae are being considered for protecting countries against the accumulation of speculative capital and whether it is considering other measures as well for regulating and supervising the financial system.
Thank you.
Mr President, two words spring to mind in discussing this topic: they are the Latin words festina lente, or 'hasten slowly', because this topic is obviously quite controversial, as all taxes are. I suppose it is particularly attractive to talk about putting tax on financial institutions to make them more risk-aware and to maybe pay for their sins, but financial transactions are global and not just European in dimension so, as Ms Swinburne pointed out, we have to consider all options.
Look where the IMF and the G20 are going, and then maybe move ourselves, but we certainly need to consider this very carefully. So I say, festina lente, hasten slowly, having thought deeply and consulted widely, and then we may need to act, with or without the aid of Robin Hood.
(EL) Mr President, Commissioner, even though the developed countries are responsible for 80% of greenhouse gas emissions, developing countries are today paying for the worst repercussions. These extremely drastic repercussions are hitting the poorest countries, the countries which have not done anything to cause the greenhouse effect.
There are currently twenty million environmental refugees. If we do not do something straight away, there will be five hundred million by 2050. We have a serious climate-related obligation towards these countries of an estimated EUR 100 billion a year. Of this, a fair share for the European Union is EUR 35 billion.
It is vital that we immediately introduce a tax on financial transactions, so that we can fund our climate-related obligation. At the same time, this tax will allow us to pay our climate-related debt to posterity by helping to fund energy independence from coal.
(ES) Mr President, Commissioner, a proposal that did not prosper two decades ago is once again the subject of discussion and debate due to the financial and economic crisis. No longer is the proposal being advocated just by academics and minority or opposition groups. Now, the G20, the International Monetary Fund and some leaders of the most developed countries in the world are suggesting the introduction of this tax. We must seize this opportunity because the time is right.
As a Member of the Committee on Development, I support the view that if such a tax is introduced, part of the revenue generated should be devoted to financing development. If the revenue were used exclusively to finance deposit insurance or for purely economic purposes, the financial sector would not be making a fair contribution to global justice. Accordingly, part of this revenue should be devoted to development aid.
Member of the Commission. - Mr President, I am pleased that you have devoted your time to this important debate. The idea of a financial transactions tax has generated a lot of attention so far. As I explained, the Commission is currently examining innovative financing at a global level and is paying particular attention to the following issues.
First, the analysis of the competitiveness aspect. As financial transactions are so mobile and financial markets so competitive, the risk of reallocation of activities to other markets appears to be very high. This means that a common approach and, at the very least, good cooperation, are necessary at international level.
A second issue is the cumulative impact of various initiatives which should not undermine the ability of the financial sector to support economic recovery.
Third, we need to get the analysis right. The Commission will soon publish its analysis of various options. I have to say that it is not so simple. We are carrying out an analysis and analysing various instruments. Those instruments are related not only to the financial transaction tax but also to possible levies on banks' assets, on banks' leverage and so on. We have to make this analysis very thoroughly in order to make proper conclusions as to which options are the best.
The Commission will compare its findings with those of one of its international partners. On this basis, the more promising instruments will be identified which the Commission will assess in further detail.
I should also say that, in the EU 2020 strategy, 'taxation' or 'taxes' is mentioned many times, which is in strong contrast with previous strategic documents. I think the Commission is paying serious attention to the issues related to developments in the taxation area.
To conclude, I would like to stress that the Commission promotes and supports a serious global analysis on the potential benefits and disadvantages of different innovative finance instruments, including a financial transaction tax. I would like to thank Parliament for its interest and involvement in this topic.
I have received one motion for a resolutionon behalf of the Committee on Economic and Monetary Policy to wind up the debate in accordance with Rule 115(5) of the Rules of Procedure.
The debate is closed.
The vote will take place at 12 noon on Wednesday, 10 March 2010.
Written statements (Rule 149)
in writing. - I have been a long-time supporter of a Financial Transaction Tax (FTT), or as the supporters in the USA call it - a financial speculation tax (FST). James Tobin was one of the first to promote the idea as a means of stabilising global financial markets and, in the process, raising substantial money for development aid. The powerful financial speculators rejected it, as did powerful governments, as not feasible. Now the IMF, as a consequence of the crisis, is studying its feasibility and we must insist that the expert report is not gutted and rendered useless by backroom lobbying. We now have the tools, for example the SWIFT clearing system in Europe, which would enable us to apply a tax. But still, contrary to research, the old spurious arguments are trotted out; 'it could be evaded, it would be a burden on consumers'. The financial crisis, driven by unscrupulous financial speculators, who continue to make vast fortunes, whose activities have brought the world economy to its knees, need to be circumscribed. The growing support for a FTT must be driven hard by public opinion for governments to act, and not to cave in to the people for whom greed is not enough.


9. Draft amending budget No 5/2009 (


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