European Parliament Approves Contested Financial Tax

Source: Mario Sammut PKF Malta¸ 25th May 2012

Europe’s fiscal pact must not be renegotiated or softened but could be complemented by growth-enhancing measures. There is a growing push in the euro zone¸ led by newly elected French President Francois Hollande¸ to do more to stimulate growth and not just focus on reducing deficits.

In fact the European parliament adopted by a strong majority Wednesday 23rd May proposals on a French-inspired financial transaction tax (FTT) which has been bitterly opposed by Britain.

However nine countries have come out in favour¸ being Austria¸ Belgium¸ Finland¸ France¸ Germany¸ Greece¸ Italy¸ Portugal and Spain.

The resolution in favour of the FTT was approved with 487 votes in favour¸ 152 against and 46 abstentions. Calls for the implementation of the tax are scheduled to start off as from 2015.

The FTT is being described as an integral part of an exit from crisis. The objective of the FTT is to bring a fairer distribution of the weight of the crisis. Thus the FTT will not lead to relocation outside the EU because the cost will be higher than paying the tax.

Parliament approved the tax rates proposed by the Commission¸ 0.1 percent for transactions of shares and bonds¸ and 0.01 percent for derivatives.

Furthermore pressure group Oxfam argued that EU leaders cannot ignore this overwhelming vote¸ and that cash raised should be used to help poor people at home and abroad hit by the economic crisis and to combat climate change.

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