200 bn euro to be gained from financial tax, say Socialists

Europe’s Socialists have said that the EU could gain €200 billion a year if it implemented a financial transaction tax of 0.05% on all products by 2011.

The estimate, drawn up by the Party of European Socialists (PES) and launched on 15 March, would be levied on all spot (simple currency) transactions, exchange-traded and over-the-counter (privately traded) derivatives to prevent speculative bubbles from bursting again. If the US and other major countries also got on board, the tax could raise €500 billion a year, money which could go towards plugging the gaps in public finances and achieving aid pledges, such as the Millennium Development Goals, PES says.

“It’s payback time now,” PES President Poul Nyrup Rasmussen said. The European Commission is currently preparing a proposal on new sources of revenue, but
Taxation Commissioner Algirdas Semeta has warned that a transaction tax is unlikely to gain support in all 27 member states. Changes to tax rules require unanimity in Council.

Last week, Commission President José Manuel Barroso said the EU was ready to regulate the speculative trading of sovereign debt, which policy makers say has aggravated
the situation in Greece, pushing interest rates on the government’s bonds up to twice the rate of Germany’s. PES says the financial transaction tax would curb speculators and
could be introduced in tandem with a banking sector levy, currently being examined in the US and already in place in Sweden.

The International Monetary Fund is weighing up the pros and cons of the tax as part of a report it will present in April, and the European Parliament’s Committee on Economic Affairs (ECON) last week voted in favour of going it alone on the tax in Europe if other economies do not get on board.

Photo: Thomas Delsol