The EC proposal is "feasible and realistic", says MEP Podimata.

 On 9 January 2012, a first discussion was held on the introduction of a European financial transaction tax in the Economic and Monetary Committee in the European parliament. The European parliament had already voted in March in favour of a European Financial Transaction Tax, as a first step before the introduction of a global financial transaction tax. Following this vote and an open consultation on the issue, the European Commission published in the autumn a legislative proposal to introduce a financial transaction tax at EU level. This proposal is now under discussion in the European parliament.

This first exchange of views in the ECON committee on January has shown an even stronger support in the EP for a European Financial Transaction Tax. As previously, Anni Podimata MEP will take the lead and be the rapporteur for the EP position on the issue.

Yesterday, she stressed the importance of the FTT Proposal, especially in the context of the fiscal compact. She welcomed this well-designed proposal by the European Commission. The EC proposal tackles possible failures in implementation in the member states, she said, avoids the tax burdens on small investors and small companies, and ensures that financial institutions pay these taxes. The EC proposal tackles the right exemptions: not only for primary markets and currency trade, but also for loans especially household loans, as well as every day financial activities such as payment transactions and transactions by the ECB. So the FTT will not affect these bodies. Financial transactions for investments are exempted and transactions by consumers are also excluded. Thanks to its smart design and its low rate, there is no real danger or relocation of trade and no loss of competitiveness for the European financial sector.

Areas of improvement of the directive were discussed with the European commission.
- As regard tax easion, most of the MEPs agreed that tax fraud and tax evasion could be efficiently avoided if the proposal was smartly designed. In the current proposal, all transactions with financial products (bonds, shares, etc.) are to be taxed when one partner is present in the EU or based in the EU. That's important to avoid tax evasion. It's not a question of where the transaction tax takes place but who is involved, and Mrs Podimata found that this is a clever way to avoid relocation. With the new registration requirements, it will be difficult or impossible for a financial institute or any other party to a transaction to evade this tax, even if the transactions take place outside the EU. To evade the tax, they would need to move their headquarters outside the EU or close their subsidiary. In addition to that, the principle underlying the UK stamp duty, which covers transactions related to British products, could also be envisaged to cover the full range of transactions related to Europe. A solution combining the resident principle (current proposal) AND the issuance principle (country of issuing, UK stamp duty) is being considered by MEPs and the European Commission.

This proposal favours investments in the real economy, which will give a competitive advantage to the European economy.

For more information on the ECON discussions, please click here.