Monday

1st May 2017

EU suggests €50 billion bank tax idea

  • Sweden already operates a national levy on banks (Photo: alancleaver)

The European Commission has published a study which suggests a new tax on banks could generate as much as €50 billion a year for EU governments, whose public finances have been left in tatters following the recent financial crisis.

The EU tax on bank leverage and risk-taking is just one of several "innovative financing options" in the commission document, published on Tuesday (6 April), with the region's finance ministers set to mull over the list at an informal meeting in Madrid this month.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

As well as helping governments improve their balance sheets, the fresh revenue could be used to fund future bank bail-outs, climate change and development goals, say the report's authors, with Germany and France broadly in support of the plans.

"The financial sector needs to contribute to the costs of financial stability. This should be one of the building blocks in our effort to set up a crisis management framework in Europe," Michel Barnier, EU commissioner for internal market and services, said in a statement.

The EU is keen to come up with a common position on innovative financing ahead of a meeting of G20 leaders in Toronto this June, with the US administration announcing plans in January to tax risky assets held by the country's large financial firms in a bid to pay for recent multi-billion dollar bail-outs.

Sweden already operates a bank levy system. The commission report calculates that "if the Swedish tax rate of 0.036 percent is applied, the revenue would be around €13 billion in 2009." However, if the US tax rate of 0.15 percent were used, this "would lead to revenue of more than €50 billion."

The new study, called for by EU leaders at a summit in October 2009, also looks at the possibility of a tax on global financial transactions, suggesting this could yield up to €20 billion.

Together with the considerable fundraising potential, the EU executive body stressed that the measures could provide a "double dividend," also helping to improve market stability by putting a price on risk-taking in the financial sector.

"Schemes aimed at pricing leverage and risk-taking in the financial sector could raise substantial revenues while limiting undesirable behavior by financial institutions and could be administered at a reasonable cost," says the report.

Financial taxes are nothing new, with US economist James Tobin first putting forward the idea of a tax on global currency transactions as early as 1972 as a means of combating market volatility.

But since then economists and politicians have underlined the need for a worldwide agreement if such schemes are to work effectively and not simply send financial activity to non-cooperating jurisdictions.

The commission report repeats the need for global agreement but adds that "even in the absence of proper international coordination, an EU initiative on the matter could be explored."

The difficulties in co-ordinating European and American initiatives were once again brought to the world's attention this week, with US treasury secretary Tim Geithner repeating his concerns that EU plans to regulate hedge funds could "discriminate" against US fund managers.

EU supports bank levy plans in G20 letter

The European Union has indicated it is ready to work with the Group of 20 leading economies in constructing a global framework for taxing banks.

Eurogroup makes 'progress' on Greek deal

Eurozone ministers endorsed an agreement in principle between the Greek government and its creditors over a new package of reforms. But talks on fiscal targets and debt could still block a final agreement.

New anti-trust complaint looms over Microsoft

At least three security software companies “met several times” with the European Commission to complain about Microsoft’s alleged abuse of its market position. A formal case could follow.

Commission stops German-British stock merger

The decision to block the merger of the London Stock Exchange and Deutsche Boerse was expected, as negotiations between the parties broke down a few weeks ago.

SMEs lack support in EU financial plan

The European Commission's plan for a capital markets union is said to be aimed at small and medium-sized enterprises, but many could end up being left out in the cold.

New anti-trust complaint looms over Microsoft

At least three security software companies “met several times” with the European Commission to complain about Microsoft’s alleged abuse of its market position. A formal case could follow.

Investigation

MEPs oppose EU agency to prevent Dieselgate II

The European Parliament said on Tuesday that there should be more EU oversight on how cars are approved, but stopped short of calling for an independent EU agency.

News in Brief

  1. Vote of no confidence prepared against Spanish PM
  2. Syria to buy Russian anti-missile system
  3. Germany seeks partial burka ban
  4. Libya has no plan to stop migration flows
  5. EU has no evidence of NGO-smuggler collusion in Libya
  6. Poland gets 'final warning' on logging in ancient forest
  7. Commission gives Italy final warning on air pollution
  8. Romania and Slovenia taken to court over environment policies

Stakeholders' Highlights

  1. European Healthy Lifestyle AllianceCharlotte Hornets' Nicolas Batum Tells Kids to "Eat Well, Drink Well, Move!"
  2. ECR GroupSyed Kamall: We Need a New, More Honest Relationship With Turkey
  3. Counter BalanceParliament Sends Strong Signal to the EIB: Time to Act on Climate Change
  4. ACCARisks and Opportunities of Blockchain and Shared Ledgers Technologies in Financial Services
  5. UNICEFRace Against Time to Save Millions of Lives in Yemen
  6. Nordic Council of MinistersDeveloping Independent Russian-Language Media in the Baltic Countries
  7. Swedish EnterprisesReform of the European Electricity Market: Lessons from the Nordics, Brussels 2 May
  8. Malta EU 2017Green Light Given for New EU Regulation to Bolster External Border Checks
  9. Counter BalanceCall for EU Commission to Withdraw Support of Trans-Adriatic Pipeline
  10. ACCAEconomic Confidence at Highest Since 2015
  11. European Federation of Allergy and Airways60%-90% of Your Life Is Spent Indoors. How Does Poor Indoor Air Quality Affect You?
  12. European Gaming and Betting AssociationCJEU Confirms Obligation for a Transparent Licensing Process

Latest News

  1. EU boasts unity on Brexit talks
  2. May’s election juggernaut
  3. EPP scolds Orban over university and NGO laws
  4. Oxford-Studie besorgt über 'Schrott' News in Frankreich
  5. Alte Freundschaft zwischen Le Pen und Putin
  6. EP chief faces questions after homophobic 'summit'
  7. EU signals Northern Ireland could join if united with Ireland
  8. One year later: EU right to open internet still virtual