European Tax Commissioner opens the way to an historical decision on the FTT

European Tax Commissioner Algirdas Semeta today announced that all legal conditions are now met for a pioneer group of member states to move ahead on a European Financial Transaction Tax (FTT) through enhanced cooperation.

Nicolas Mombrial, Oxfam’s EU policy advisor, said:

“The European Commission today removed the final obstacles to an FTT and nailed the scare stories of critics.

“This is a once in a generation chance to ease the burden on European citizens by raising €37bn from the under-taxed financial sector. Countries which have not signed up should do so or risk finding themselves on the wrong side of history.

"Leaders of the 11 have a responsibility to use Financial Transaction Tax revenues to do more than plug holes in domestic budgets; they should help poor people at home and abroad who have been hit hardest by the economic crisis and tackle climate change."

Note to Editors

• To date, 10 countries have formally informed the European Commission of their support to set up a European FTT (Austria, Belgium, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia, Spain). Estonia should soon follow upon consultation of its parliament.
• Based on the initial European Commission proposal, the German Institute for Economic Research (DIW) estimates that a financial transactions tax implemented in 10 countries could raise €37bn. 
• Due to the opposition of some member states, Germany for example, an allocation of the FTT to the EU budget is unlikely. Member States are more likely to collect the FTT for their own budget. Discussions are already ongoing at national level on how to allocate the funds. France has for example decided to allocate 10% of its unilateral FTT to development and the fight against climate change. On the European financial transaction, French Finance Minister Moscovici indicated that parts of the proceeds of the tax should be used to fund development (source).
• For more information on what difference an FTT could make for poverty reduction and the fight against climate change, click here.

Next steps

• Today’s draft authorization decision will be submitted for discussion by Finance Ministers at the November ECOFIN (13th November). The Council Presidency and the European Parliament will decide when they will take their respective votes on the issue.
• Once the green light is formally given for the enhanced cooperation, the European Commission will send a detailed proposal that will include the rate and the basis of the tax to be discussed and agreed amongst the small group of member states. The proposal is likely to be based on its initial proposal from September 2011 (0.1% on shares and bonds ; 0.01% on derivatives).
• It is up to Member States to decide how to allocate the funds collected through the Financial Transaction Tax.