News

According to the EU Tax Commissioner Semeta during today's meeting of finance Ministers (ECOFIN), and as reported by Associated Press, eleven member states are now supporting the Financial Transaction Tax on the basis of Enhanced Cooperation – that’s two more than the 9 minimum that were needed to form an official EU agreement. All concerns in the last weeks, that the quorum of nine would not be reached, are now groundless.



UNI Finance welcomes this major breakthrough and decided to join a broad coalition of trade unions, NGOs, international organizations as well as finance industry professionals and experts supporting the Financial Transaction Tax.



UNI General Secretary Philip Jennings sad, "This is a significant step toward a Europe- wide Financial Transaction Tax and a giant leap forward to a more equitable system where super-rich companies making multi-million euro deals put a small percentage back into society. Until now the investment bankers, who count among their number those who bear the lion's share of responsibility for the financial crisis, have got away scot-free, It's been the workers and the growing number of unemployed who have felt the effects of misguided cuts and austerity measures. A FTT will help build a financial safety net. We are not there yet but we welcome today's development."



Besides the four biggest economies of the Euro zone - France, Italy, Spain, Germany - also Austria, Belgium, Estonia, Greece,

Portugal, Slovakia and Slovenia are supporters. Others might join in the further process.



Although the procedure of Enhanced Cooperation is complicated, there is now quite a strong political will behind the project, so that we can expect definitive implementation rather soon, perhaps already during 2013.



The next steps are:

1) European Commission delivers their tax proposal (likely to be based on their existing design of 0.1% on stock and bonds and 0.01% on derivatives trades),

2) EU parliamentary vote (they’ve already passed a resolution in support), and finally

3) a qualified majority vote in the European Council (which could happen as early as December).



This is a huge step forward, but there will be remaining fights, now doubt, over the design of the tax and allocation.

There is now an unprecedented window of opportunity to make the FTT succeed.



UNI Finance signed the FTT letter copied below, which will be addressed to G20 and European Leaders.

UNI is calling its affiliates to join this important global effort by signing the letter on behalf of their national unions.



LETTER IN SUPPORT OF FINANCIAL TRANSACTION TAXES

"Dear G20 and European leaders,



As individuals with first-hand knowledge and significant experience in the financial industry, we urge you to introduce small financial transaction taxes (FTTs). These taxes will rebalance financial markets away from a short-term trading mentality that has contributed to instability in our financial markets. They also have the potential to raise significant revenue.



In the last few decades, financial market activity has increased tremendously, with the value of transactions now seventy times greater than the size of the real global economy. The primary role of financial markets is to raise investment, allocate resources efficiently, and mitigate risk. However, much of today’s financial activity does not contribute to these goals. Computer-driven, high frequency trading, for example, allocates resources on the basis of algorithms designed to turn very short-term profits and have been shown to drain liquidity in stressed markets when it is needed most.



Financial transaction taxes of a small fraction of a percent on each trade, such as those proposed by the European Commission and backed by a number of G20 countries, would moderate the incentives for such short-term speculation while having a negligible impact on long-term investment.



Concerns have been raised that FTTs could damage growth. But a growing body of evidence suggests that by reducing volatility and raising much needed revenue, the overall effect would be positive. Critics have also wrongly associated trading volume with efficiency-enhancing liquidity and failed to sufficiently take into account market resilience and trust that are undermined in a world where very short-term trading dominates the financial system. As many notable economists have observed, a modest transaction tax will actually improve the functioning of markets.



FTTs have a proven track record. Numerous countries, including those with deep and fast-growing markets, such as the UK, South Africa, Hong Kong, Singapore, Switzerland, and India, currently have FTTs on particular asset classes that raise billions of dollars per year. New FTTs, whether agreed by the G20, EU, or by individual countries, offer a real opportunity to help restore the financial sector to its proper role, while raising massive revenues for people in urgent need at home and in the world’s poorest countries. We believe this is an opportunity that should not be missed."



To add your signature to this letter, please contact:

Sarah Anderson

Global Economy Project Director

Institute for Policy Studies

saraha@igc.org