FTT gains momentum in Europe

EuroStep – Ahead of a European Council meeting last week, European Commission (EC) President José Manuel Barroso announced to table a communication on the imposition of a financial transactions tax (FTT) in the EU after the summer break. Following heated debates among the different EU institutions that were divided on this issue, Barroso’s announcement has been regarded as a significant breakthrough by FTT advocates. The European Parliament (EP) has continually advocated for an EU level FTT to make the financial sector actively contribute to the recovery of the current financial and economic crisis. Previously the EC has only supported such a tax only on a global level, thus stalling progress on an EU level FTT. The split between the EC and EP became specifically apparent when EU Commissioner for Taxation and Customs Union Algirdas Šemeta called the EP ‘premature’ for actively supporting the introduction of an EU FTT.

Despite the EC’s continued efforts to advocate for the introduction of a FTT at global level, Šemeta has now announced “there [were] ways to implement a financial transaction tax in the EU while mitigating the main risks identified”, and that he would recommend this to other commissioners as well. Activists have argued that this change of opinion can largely be explained by the overwhelming support for an EU FTT in the public consultations and the pressure from trade unions and civil society movements.

With efforts to agree on a global tax in the group of 20 major economies (G20) being blocked due to significant opposition by some of the G20's members, the EU should take responsibility and move ahead with the introduction of the tax, Barroso said. “Our analysis shows that there is a strong case for deciding on a financial sector tax in the EU as a first step” whilst in parallel continuing “to work for a global agreement on a financial transaction tax”, the EC President stated.