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Vote: Common system for taxing financial transactions, final vote, May 2012.
The current economic crisis started in the financial sector. Several big European banks could no longer meet their obligations and were in danger of imminent collapse. National governments had to intervene to bail them out. As a result of the crisis banks stopped lending to governments with unsustainable levels of debt. The EU intervened to bail out those governments, but it also told them to make big cuts to reduce their deficits. Taxes were increased and wages and pensions were cut. Citizens picked up the bill for years of risky lending and trading by big banks.
The crisis gave renewed impetus to an old idea: a tax on financial transactions (FTT), also known as the Tobin tax or the Robin Hood tax. This tax was designed, among other things, to put a brake on speculative trading. In 2012 the European Parliament adopted a resolution urging Member States to introduce an FTT. Such a decision requires the unanimous agreement of all 28 EU Member States. As several Member States threatened to veto the proposal, 11 Member States decided to go it alone and try to reach an agreement that would only apply to them.
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The FTT reduces the incentives for financial market speculation and can thus help prevent future crises. The FTT would raise additional revenue which national governments can use to cut their deficits or increase public spending on things like employment policy. The FTT is a means of making the financial sector pay a fair share of the cost of the financial crisis. |
An FTT should only be introduced at a global level. If the EU acts on its own, our financial sector will be put at a competitive disadvantage. The introduction of an FTT could lead to tax evasion. Moreover, banks might pass the increased costs on to their clients. An FTT hampers economic growth and kills jobs, while the revenue it raises is minimal. |
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