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Small step but giant leap for the financial transaction tax

17 October, 2012Eleven countries agreed to implement a Financial Transactions Tax (FTT) in the near future at a meeting of European Union finance ministers in Brussels on 9 October, however questions still remain on where the money will go.

On 9 October Austria, Belgium, Estonia, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain agreed to coordinate the implementation of a FTT.

The timetable for the implementation of a FTT is uncertain, but may be done by the end of the year. Although the initiative is strongly backed by 11 euro-zone countries, there are differences of opinion over how much revenue the tax will generate and what the income should be used for.

As there is now political will to impose the FTT, the next steps to introduce the tax will be.

  • European Commission submits a FTT proposal likely to be based on the existing proposal of 0.1% on stock and bonds and 0.01% on derivatives
  • EU parliament gives its assent (EP has already expressed its support for an EU FTT twice)
  • European Council’s qualified majority vote to go ahead with the enhanced procedure

See press release from the European Council here.

For the past 3 years, in a climate of economic insecurity, citizens, grassroots organizations, NGOs and trade unions have been demanding and continue to demand the implementation of a FTT through a massive campaign called the Robin Hood Tax. Although this new development in Europe is a big step there are still many questions of concern on where the income generated by the tax will be spent.

The revenues generated by FTT could fund programmes to assist those most affected by the financial crisis, alleviate poverty and fund climate action. The FTT could eliminate extreme forms of speculative behavior, which have no social value, and seek better financial sector accountability.