An EU financial transaction tax could raise €57 billion per year, Taxation Commissioner Algirdas Semeta told leading Economic and Monetary Affairs Committee MEPs on Thursday, a week after the Commission presented its proposals for such a tax. Mr Semeta shrugged off the reticence shown by some, telling MEPs that no tax proposal had ever received Member States' immediate full support and that company flight would not be the "major pattern" because tax regimes alone do not determine location.
Mr Semeta told MEPs that it was time to make the financial sector contribute more and at the same time reduce risky practices. Speaking specifically about the contentious practice of high-frequency trading, Mr Semeta also said that a financial transaction tax could force firms to rethink this model of trading since it would be the practice most targeted by the tax.
The debate saw wide divisions, notably between British Conservatives and some Liberals on one side and Greens and Socialists on the other.
A clash of ideas
Kay Swinburne (ECR, UK) argued against the tax, warning of "putting the EU financial centre in jeopardy" as firms leave to other parts of the world which would not be imposing such a tax. Olle Schmidt (ALDE, SE) feared for the future of Sweden's financial services, arguing that it would be such smaller financial centres that would suffer, rather than London's better- established one.
Philippe Lamberts (Greens, BE) hit out at critics of the tax, saying that they were not defending the common good but rather the "interests of just a few thousand people making money even from this crisis". On doubts as to whether the tax would succeed, Mr Lamberts drew a parallel with the once-fierce asbestos lobby - "Some years ago we were not sure about the benefit of eliminating asbestos either", he said.
Various other MEPs asked for clarifications on the geographical scope of the rules, the way the revenue would be divided between the EU budget and national budgets and who would collect it, and pointed out that less of the tax burden should end up on the shoulders of institutional investors such as pension funds and more on those of investment banks.
Mr Semeta replied that the scope would need to be as wide as possible, but said he was fully aware that it would not yet be possible to go global. He also stressed that if some Member States were not willing to participate it would be possible to use enhanced cooperation, with the tax being imposed on all institutions headquartered in the participating countries, thereby also taxing their activities outside.
He added that he believed that pension funds, as less intensive users of financial trading than investment banks, would be less affected by the tax. However he also cautioned against developing exemptions since this could lead to circumvention. The question of how to distribute the proceeds was still being worked upon by budgets Commissioner Lewandowski, Mr Semeta said.
The discussion can be watched at the link below.
In the chair: Sharon Bowles (ALDE, UK)