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Pendulum swings in favour of Eurozone financial transaction tax

Monday, 09 January 2012
Pendulum swings in favour of Eurozone financial transaction taxA very broad agreement in favour of an EU financial transaction tax emerged today, at the start of the Economic and Monetary Affairs Committee's work on the legislative proposal. Spokespeople for the European parliament's various political groups all advocated the tax, at least throughout the eurozone, and some deplored France's weekend hint that it could go it alone.http://www.ftseglobalmarkets.com/

A very broad agreement in favour of an EU financial transaction tax emerged today, at the start of the Economic and Monetary Affairs Committee's work on the legislative proposal. Spokespeople for the European parliament's various political groups all advocated the tax, at least throughout the eurozone, and some deplored France's weekend hint that it could go it alone.

Various MEPs said that in recent months they had shifted their position in favour of a financial transaction tax. Danish MEP Wolf Klinz explains that this was  "because the financial sector has not learnt the lessons from the crisis".  The shift suggests that more MEPs may favour the proposal than was the case some months ago.  Only the ECR spokesperson, Czech MEP Ivo Strejček, stood by his group's fundamental opposition to the tax.

A large majority of MEPs are believed to want the proposals to be implemented, at the very least, by all eurozone members. French MEP Pascal Canfin (of the Greens Party) rejected the argument that "ordinary consumers" would see the cost of the tax shifted to them, noting that the main "consumers" on financial markets are in fact high-frequency traders and banks trading for their own profit. Other MEPs felt that the tax was not a punitive measure, but one which ensured that the financial community would share some of the burden of the crisis.

By narrow margins, Europe's parliament had already pronounced itself in favour of a financial transaction tax even at the end of 2010. The Commission tabled its legislative proposal late in 2011.

The ECR group however struck a lone chord of dissent.  All its representatives warned of the dangers of the tax, stating that relocation of financial players would likely take place within weeks of its imposition and added that it was states and not banks which were responsible for current crisis impacting on Europe.

The UK MEP Marta Andreasen, noted that it was "incredible that we are discussing a financial transaction tax for 2014 when the euro is burning."

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