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3rd Jul 2022

EU commission tables financial tax for 11 states

  • Details of the proposal - such as where the revenue will go - remain unclear (Photo: ansik)

The EU commission on Tuesday (24 October) proposed that a group of 11 countries move ahead with a common financial transactions tax, after years of wrangling failed to produce a deal among all member states.

Estonia late on Tuesday joined an earlier group of 10 - Austria, Belgium, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain - willing to go ahead with the tax.

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The proposal still needs the approval of a majority of the EU's 27 countries and the European Parliament, after which a joint legal text will be issued.

EU tax commissioner Algirdas Semeta said this will be "the epitome of a fair tax," raising "billions" of euros while helping to curb the "casino-type trading" that caused the 2008 financial crisis.

The roots of the idea go as far back as 1972 when Nobel laureate James Tobin proposed a tax on currency speculations.

Some countries have in the meantime introduced one form or another of taxation on financial services, but the idea for an EU-wide tax failed to gather the support of Britain, Sweden, Malta, Ireland and Luxembourg as well as other states which are wary that in the absence of a worldwide tax, financial businesses will move elsewhere.

Semeta said that even if it is applied among just 11 countries the tax will "replace a patchwork of different national approaches" making it easier for operators throughout the EU.

What will be done with the revenues is so far unclear.

One idea is to have it help finance a eurozone-only budget (all 11 countries are euro members) which should cushion the impact of austerity measures in places like Spain and Greece.

Development NGOs say the money should go to poorer regions in the world, allowing member states to deliver on humanitarian commitments.

"This tax can raise billions of euros of much-needed revenue for member states in these difficult times," commission chief Jose Manuel Barroso said, without specifying how it should be used.

The details on the level of the tax are not clear either.

An EU-wide proposal that was binned earlier this year suggested a 0.1 percent tax on regular trades and 0.01 percent on derivatives, including the automated speculative trading that goes on in milliseconds upon slight variations in the markets.

Back then, the EU-wide tax was estimated to bring in €57 billion a year.

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