A Financial Transaction Tax (FTT) in the European Union (EU) could be set in place by January 2014, following the approval of EU Finance Ministers meeting in Brussels on 22 January 2013.
The significant milestone is being celebrated as a major victory by a wide alliance of trade unions and civil society groups who have long campaigned for national governments to adopt the tax on trading. The FTT, also known as the Robin Hood Tax or Tobin Tax, is designed to discourage the high-risk casino capitalism that led to the global economic crisis, make the financial sector take responsibility for the crisis it caused, and also generate funds for development and combating climate change.
The 22 January decision allows 11 Eurozone states to pursue the tax. The countries are Germany, France, Italy, Spain, Austria, Portugal, Belgium, Estonia, Greece, Slovakia and Slovenia. Those 11 countries account for around 90 per cent of Eurozone GDP and include 4 of the EU’s 5 biggest economies, with the notable exception of the UK.
The scheduled vote was not necessary as it was clear that there was sufficient support to move forward. The right-wing UK government would have abstained in the vote along with Luxembourg, Czech Republic, Denmark and Malta.
The tax is likely to be harmonized at a minimum 0.1 per cent rate for trades of stocks and bonds and a 0.01 per cent rate for derivatives trades. The levy on financial speculation in the EU is estimated by a German institute to stand to generate €37 billion a year, and will serve as serious leverage for the FTT campaign elsewhere throughout the world.
There is no agreement yet as to the use of the funds created by the FTT. The international campaign will now focus efforts on ensuring they are used for social and environmental purposes. France has been hailed as a model for others to follow after allocating 10 per cent of the revenue “to the benefit of the poorest in the world”.