Could a tax on financial transactions help to discourage reckless financial speculation and ensure banks contribute more towards the cost of the crisis? Eleven EU countries believe it could and next week Parliament will debate and vote on the rules governing this tax. We spoke to Greek Social Democrat Anni Podimata, who wrote the opinion, about how to ensure that the tax works as intended.
Progress on the tax has been slow and as no agreement could be reached among all member states. However, France, Germany, Belgium, Austria, Slovenia, Portugal, Greece, Slovakia, Italy, Spain and Estonia decided to go ahead with the tax regardless.
The tax is not very popular with banks. How can we ensure that they will not try to avoid paying it and move business outside of the EU?
I don't see grounds for concern that banks might relocate. We have sought to design the tax in a way that it applies very low tax rates to a broad range of transactions. We also suggest that in order for any EU transaction to be legally binding, the tax has to have been paid to further limit the risk of relocation of business
I don't think the tax imposes high costs on the financial industry but it does target the most harmful and speculative transactions - the automated high-frequency trade – that can cause systemic risk and that have accentuated the crisis.
One of the ideas behind the tax was to use the part of the revenue as EU funding. Now that not all member states will participate, what difference would the tax make for the EU budget?
This directive does not deal with the management of the revenues. Nevertheless, we still insist that part or all of the revenues should be used for the EU budget. In this first stage the national contributions of the participating member states to the EU budget could be reduced with the corresponding amount of the tax's revenue. But we need a stronger EU budget and the ultimate goal when the tax is implemented in all member states, will be to use the revenues from the tax in addition to the national contributions to further increase the EU budget.
What is the future of this tax? Do you foresee other EU countries joining?
It is encouraging that even in the UK which has strongly opposed the tax, there is now a public debate about it and about working with the US to extend the geographic scope of its application. Parliament has always said that this tax will be able to fully produce its benefits when it is introduced at a global level.
So far it has been ordinary people that carried the burden of the crisis. Our main commitment in the EP is to show them we are working to make sure the costs of the crisis are redistributed in a fairer way.
Plenary debate 2 July, vote 3 July