Support the Financial Transaction tax in the European Parliament!
In March 2010, the European parliament passed a resolution calling on the European Commission to consider the financial transaction tax option. One month later, on 6th April 2010, the European Commission published a "working paper" (which is not a legislative proposal) on innovative sources of financing, which criticized the financial transaction tax. Since then, the official position of the European Commission has been to "support the idea of a Financial Transaction Tax (FTT) at global level".
At European level, the European Commission has the monopoly of introducing a legislative proposal. But "working documents" and "communications" are no legislative value and have, therefore, no legal value. They are just "positions". As a consequence, the only possibility for the European parliament to respond to such documents is to introduce an "own initiative report", which is limited in size, and has no legal value: it is just a political position of the European parliament.
In the European parliament, the Group of Socialists and Democrats (formerly called "Party of European Socialists Group") has appointed Mrs. Podimata, a Greek Member (MEP), as rapporteur of an "own initiative report" on innovative financing. This covers, among others, the financial transaction tax issue.
Before drafting the report, Mrs Podimata's office consulted Civil Society Organisations. The report is progressive and pro-FTT and supported by left wing political groups in the European Parliament.
On October 20 2010, the Beres report on "the financial, economic and social crisis: recommendations concerning measures and initiatives to be taken (mid-term report)", was adopted with a large majority including the social democrats, the Greens, the liberals and the conservatives and its article 63 mentions:
"(The European parliament) Favours the introduction of a tax on financial transactions, the revenue from which would improve the functioning of the market by reducing speculation and help to finance global public goods and reduce public deficits; considers that such a tax ought to be as broadly based as possible or, failing that, that the financial transaction tax should be introduced as a first step at EU level; calls on the Commission swiftly to produce a feasibility study taking into account the global level playing field and to come forward with concrete legislative proposals"
Despite this strong position, the Podimata report is being challenged by the right wing (for further details, please see below), and that's why it needs support. The Europeans for Financial reform therefore strongly encourage all members of their member organisations, on writing to their MEPs before the two votes in the European parliament, which are due to take place in February and March 2011.
First phase: writing to ECON MEPs by February 1st 2010
Second phase: writing/twittering to ALL MEPs before March 7 2011
Podimata Report in the European Parliament
In the European parliament, the reports are first discussed in the Committee responsible (in that case, the Committee for Economic and Monetary Affairs -ECON). Amendments are tabled, discussed and voted in the Committee. Usually, the different political groups find a compromise on the amendments. The report is then adopted (as amended) in the Committee, and then goes to the plenary, where it can be amended before the final vote.
The current economic situation and the proposed budgetary cuts, as well as the ongoing conflict between the council and the parliament concerning the EU budget has made the issue of new financing measures even more important. On December 1st, the ECON committee in the European parliament discussed the 194 proposed amendments to the (12 pages long) draft report on innovative financing.
The Socialists and Democrats are of course behind Mrs. Podimata. The Greens, represented on this issue by Green Party president Philippe Lamberts (Greens/EFA, BE) and the GUE (Far left) groups are also supportive of the FTT. The Podimata Report deplores the recent EC Communication and stresses:
- the revenue potential of a low-rate FTT
- the FTT would curb speculation
- the FTT should have the broadest base possible
- the momentum behind the proposal to introduce a global FTT is about to be lost / the EU should move ahead on the introduction of an EU FTT;
- EU FTT is technically feasible
- The importance of comprehensive rules on exemptions and thresholds in order to ensure that the main burden is not transferred to retail investors and individuals;
- bank levies and FAT cannot take on the role of curbing financial speculation and further regulating shadow banking / FAT is a solely revenue-oriented tax tool
The EPP ED (Centre-Right parties) position is against a European FTT.
They are repesented on this issue by Danuta Hubner, a Polish MEP, argued that the EP agrees on a global FTT (position of the European Commission) , but opinion differs radically when it is a question of an FTT at the EU level. She wants the parliament to wait for the results of the commission impact assessment on tax of the financial sector before deciding upon this point.
Another active anti FTT is Gunnar Hokmark, From Sweden. On December 1st, he argued that speculation is in the vast majority of cases positive. He then explained that the member states are currently going to the market for money and if there was an FTT, the states would ultimately end up paying for it. He warned that there is no such thing as free money and that it is far easier to move a transaction than a person. In the light of this, he argued that an FTT would drive transactions to China, just as the Swedish FTT drove transactions to London. He also called for an impact assessment before the parliament starts to call for an FTT.
The ECR (British Conservatives) is of course strongly against. Vicky Ford (ECR, UK) said in the December discussions that the UK and several other member states have already introduced levies in order to get back the funds given to the financial sector and asked to wait for the EC Impact assessment.
The ALDE Group (Liberals), represented by Olle Schmidt (ALDE, SE) had a weak anti FTT position and just wants to delay the EP position (FTT at global level only, wait for EC assessment).
- Calendar / Official dates
Adoption in ECON Committee: 1 February 2011
- Adoption in Plenary session: 7 March 2011
MEPs to target
The Podimata report on "innovative financing" will be voted in the ECON Committee on 1st February.
The objective is twofold:
1. To put pressure on the MEPs who have tabled the amendments
2. To push individual MEPs into supporting progressive positions, even if this is not the position of their political group.
The main points of disagreement regarding the report have focused on the financial transaction tax issue. Negotiations of compromise amendments at the committee level were left pending last week. Then the Presidents of the Political groups agreed on a compromise amendment that would endorse the wording of paragraph 73 of Beres report, stating that failing to introduce a financial transaction tax at global level, FTT should be introduced as a first step at EU level. But the EPP-ED and ALDE members of the ECON committee are still hesitating to follow this agreement. ALDE has asked for a split vote on the concrete part on EU FTT and it is possible that EPP-ED will do the same, marking a free voteon the crucial point. In that case in the EPP ED, some MEPs will follow Joseph Daul MEP (President of EPP ED Group) & Jean-Paul Gauzès MEP (ECON member) and vote in favour, others will follow Danuta Hübner MEP and vote against.
The main issue is paragraph 7 of the Podimata report, where Mrs Podimata wants to have the same wording as the Beres Report:
Favours the introduction of a tax on financial transactions, the revenue from which would improve the functioning of the market by reducing speculation and help to finance global public goods and reduce public deficits; considers that the introduction of a tax on financial transactions ought to be as broadly based as possible or, failing that, that the financial transaction tax should be introduced as a first step at EU level; calls on the European Commission swiftly to produce a feasibility study taking into account the global level playing and to come forward with concrete legislative proposals;
Basically, the centre-right MEPs in the ECON Committee want to delete the sentence in red. We do not know precisely how each MEP will vote and one or two votes might make the difference, SO WE NEED TO PUT PRESSURE ON EACH SINGLE MEMBER OF THE COMMITTEE.
List of ECON Committee Members:
President: Sharon Bowles, ALDE
GARCÍA-MARGALLO Y MARFIL, José Manuel Vice-Chair, Spain, EPP ED
STOLOJAN, Theodor Dumitru Vice-Chair, Romania
EPP ED, email@example.com
BALZ, Burkhard, Germany, EPP ED, firstname.lastname@example.org
BINEV, Slavi, Bulgaria, Non attached
BLOOM, Godfrey , UK, EFD
DATI, Rachida, France, EPP ED
Sari ESSAYAH, Finland, EPP ED
EPPINK, Derk Jan, Belgium, ECR
FEIO, Diogo, Portugal, EPP ED
FORD, Vicky, UK, ECR
Hungary, EPP ED
GAUZÈS, Jean-Paul, France, EPP ED
GOULARD, Sylvie , France, ALDE
Iliana IVANOVA, Bulgaria, EPP ED
HAGLUND Carl, Finland, ALDE
HÖKMARK, Gunnar, Sweden, EPP ED
Danuta HÜBNER, Poland, EPP ED
KARAS, Othmar, Austria, EPP ED
KLINZ, Wolf, Germany, ALDE
KRATSA-TSAGAROPOULOU, Rodi, Greece, EPP ED
LANGEN, Werner, Germany, EPP ED
LULLING, Astrid, Luxembourg, EPP ED
MARTIN, Hans-Peter, Austria, Non attached
MÉNDEZ DE VIGO, Íñigo, Spain, EPP ED
NITRAS, Sławomir Witold, Poland, EPP ED
PAKSAS, Rolandas, Lithuania, EFD
PALLONE, Alfredo, Italy, EPP ED
SCHMIDT, Olle, Sweden, ALDE
STREJČEK, Ivo, Czech Republic, ECR
SWINBURNE, Kay, UK, ECR
THYSSEN, Marianne, Belgium, EPP ED
TREMOSA i BALCELLS, Ramon, Spain, ALDE
WORTMANN-KOOL, Corien, Netherlands, EPP ED
ANDREASEN, Marta, UK, EFD
What to say to your MEPs: standard letters
We will provide an update following the ECON vote and in advance of the plenary vote (if necessary) on the website www.europeansforfinancialreform.org