EP adopts Financial Transaction Tax opinion

MEDIA ROOM

In its opinion adopted on Wednesday, the European Parliament said that the proposed financial transaction tax (FTT) should be better designed to capture more traders and make evasion unprofitable. The opinion also states that the tax should go ahead despite the fact that only some member states opted for it. The opinion was approved with 487 votes in favour, 152 against and 46 abstentions. Maltese MEPs voted against.

Tax rates proposed by the Commission

It would appear that the tax rates proposed by the Commission (0.1% for shares and bonds and 0.01% for derivatives) are considered suitable and pension funds should be the only sector exempted from the tax.

Parliament has been calling for a financial transaction tax (FTT), for almost two years and the Commission tabled a legislative proposal for one late in 2011. The latest Eurobarometer survey shows that 66% of Europeans favour such a tax.

During the debate, Rapporteur Anni Podimata (S&D, EL) said that the FTT is an integral part of an exit from crisis and would not lead to relocation outside the EU because the cost of this is higher than paying the tax.”.

In terms of tax evasion, it would appear that the resolution also raises the stakes to make evading the FTT potentially more expensive than paying it. This is due to the fact that FTT rates would be low – hence the risk is expected to far outweigh any potential financial gain from evasion.

On another note, iff it is not possible to establish the tax throughout the EU at the outset, enhanced cooperation should be envisaged, the resolution says. However, it also recognises that introducing the tax in a very limited number of member states could lead to the single market being undermined and that measures should therefore be taken to prevent this.

Moving on to pension funds, various exemptions were requested by a number of MEPs. In the end the most substantive exemption was that granted to pension funds, which would see the tax waived on their transactions.

The opinion maintains the Commission proposal timetable: 31 December 2013 deadline for member states to adopt implementing laws and 31 December 2014 for entry into force of these laws.