Brussels, 8th March 2011. The European Parliament today adopted a position backing the idea of a Financial Transaction Tax (or “Robin Hood tax”), which could raise billions and ensure that the financial-services sector contributes better towards the cost of recovering from the current economic crisis.
The objective of the tax is to raise money for key European objectives, including development and climate change. While the Labour group in the Parliament backed the idea, the Conservatives refused to support the report, which calls for banks and other financial companies to pay a fairer level of taxation.
The report had a rocky ride through the European Parliament. The S&D group re-tabled the proposal after defeat by a blocking majority of Liberal and Conservative members (21 votes for and 21 against) in the Parliament’s economic and monetary affairs committee.
In the end a majority of MEPs from across the political spectrum approved the report. In addition to the FTT, it posits the idea of an impact assessment on a system of common European bonds, financing of the Trans-European network and a strengthening of the Emissions Trading Scheme (ETS).
Arlene McCarthy MEP, Labour spokesperson in the European Parliament on economic affairs, said that, “Global agreement would be the best way to introduce such a tax, but the UK’s stamp duty on shares demonstrates it is possible to introduce a successful, well-designed financial transaction tax without undermining competitiveness. An EU-wide coordinated FTT would be the first step towards a global FTT. It is time for action and the EU can lead this campaign for global fairer taxation.”
The news was welcomed by anti-poverty campaigners, who have long been demanding some form of FTT or Robin Hood tax. Oxfam for example, together with a broad coalition of civil society organizations, is calling for an average tax of 0.05% on share, currency, bond and derivative deals to help tackle pressing international challenges such as poverty and climate change. Oxfam states that the tax could generate 210 billion euros a year in Europe alone, according to a report from the Austrian Institute of Economic Research (1).
A European Commission impact assessment on the feasibility of the FTT is expected in June 2011.
(1) Dr. Stephan Schulmeister, Austrian Institute of Economic Research (Visiting Scholar at the International Monetary Fund/FAD), ?Short-term Asset Trading, long-term Price Swings, and the Stabilizing Potential of a Transactions Tax?; November 2010, p.21.