By Constant Brand
Commission calls for tax on financial transactions
Financial tax and levies on carbon emissions to guard against future financial crisis and pay for development aid.
The European Commission has suggested EU member states consider imposing a financial transactions tax and new levies on carbon-dioxide emissions to guard against future financial crises and help pay for development aid.
A working paper drafted by the Commission published Tuesday (6 April) is meant to feed into debate at an informal meeting of EU finance ministers in Madrid on 15-17 April.
The 59-page paper assesses what options EU member states have for raising new levies. It suggests a levy similar to a ‘stability fee’ Sweden introduced last year to fund possible future national bank bail-outs. The Swedish fee is calculated based on all bank liabilities (excluding equity capital and some junior debt securities). The Commission paper suggests such a fee, if implemented across the 27-nation bloc, could bring in between €11billion and €13bn a year, depending on the tax rate used.
The Commission also suggests imposing a tax on all financial transactions, which could raise €20bn in Europe alone. A fee on currency transactions could bring in US$30bn (€22.2bn) if applied to the world’s major currencies, including the euro, the US dollar, the Japanese yen and the British pound.
The report says that billions of euros more can be raised through fees on bankers’ bonuses and co-ordinated increases in corporate tax rates.
On emissions, the report suggests that EU member states consider raising the costs of emissions trading allowances or imposing a tax on emissions not covered in the trading scheme, like those caused by aviation or shipping sectors, to raise money for an international aid fund that would help poorer countries deal with climate change.
The report adds that member states should also consider using parts of revenues raised from national lotteries for development aid.
The Commission working paper comes after Germany and the UK promised last week to push for a global agreement to make banks pay for special funds to guard against future financial market crises. The two countries want to introduce levies on banks to pay for “resolution funds” which would be used to wind up banks on the verge of bankruptcy.
The two countries want the EU and the US to push for a global approach to new levies at the G20 summit to be held in Toronto, Canada, in June.
G20 finance ministers will meet in Washington, DC, on 22-23 April to discuss proposals from the International Monetary Fund on bank levies.