EU Leadership Plans Tax on Financial Transactions, Newsy Business, Oct. 1, 2011
BY: MIKKEL NOEL LANZKY
The European Commission is putting forward plans for a financial transactions tax in an effort to recoup some of the bailouts the EU has given out to fend off the financial crisis and to curb future speculative trading that contributed to the creation of the crisis.
Bloomberg gives us the lowdown.
“The proposal would apply a tax of 0.1 percent on trading of stocks and bonds, with a 0.01 percent rate for derivatives contracts [...] The proposed tax is aimed at banks, investment firms, insurance companies, pension funds, stockbrokers and hedge funds, among other types of financial firms.”
The tax, laid out by Commission President José Manuel Barroso in a speech to the European Parliament could bring in about €55 billion in revenue. According to the Financial Times, Barroso argues EU countries have guaranteed more than 4 trillion Euro to support the banking sector.
“It’s a question of fairness… it is time for the financial sector to make a contribution back to society.”
Left-leaning British newspaper Morning Star quotes former investment banker Sony Kapoor supporting the tax.
“Financial transaction taxes, appropriately designed, can not only raise substantial revenue but also enhance stability by discouraging destabilising trading that serves little economic purpose.”
The European Commission wants the tax to come into effect in 2014, but there are political hurdles. The UK is firmly against taxing financial activity, London’s banking center is the focal point of the global financial markets.
Transcript by Newsy.