In an article published on February 1, in the German newspaper Süddeutsche Zeitung, EU Commissioner Algirdas Semetas defends the Financial Transaction Tax with precisely the arguments used by the European Finance and Development Network. Worth reading!
Peter Wahl
Thanks for the translation made by Peter Wahl and Markus Gaudus
"Little by little the financial transaction tax approaches its implementation. There is increasing consensus on many aspects of the Commission’s proposal, and with regard to the remaining controversies there are constructive contributions being made. Simultaneously a massive wave in support for the FTT has emerged among citizens. For them, the benefits of this tax are clear: An equitable distribution of the tax burden, a more stable financial sector and considerable additional revenues.
Instigating such unfounded fears is inexpensive and irresponsible. An open and straightforward debate on the FTT is, of course, of central importance, but it must be based on facts. And it must be conducted with the sense of proportions and really refer to the existing proposal. It is time to get rid of some of the myths surrounding our proposal for a Financial Transaction Tax.
First of all, concerning the economic impacts in the EU, the FTT will neither damage growth and competitiveness nor lead to more unemployment. From an isolated perspective every tax causes economic costs. However, the costs of the Financial Transaction are small and, absolutely legitimate, given the enormous support the financial sector has been granted in the recent years.
Furthermore, the costs have to be offset against the positive effects from the use of the revenues of the Financial Transaction Tax. If the expected annual 57 billion Euros are used to consolidate national budgets, to lower other taxes or to invest in public services and infrastructures, the financial transaction tax will surely have a positive impact on growth and employment in Europe.
Secondly, forget the argument that the ordinary citizens and enterprises will have to shoulder the main burden of the tax. First of all it has to be reminded, that current account operations by citizens and enterprises do not fall under the tax. 85 percent of the transactions affected by the FTT are operated exclusively among financial institutions. Even if the financial sector should pass on a part of the costs to his clients, this might not be disproportionate in the end. If somebody is purchasing stocks at 10.000 Euros, he can easily afford a tax of 10 Euros for such a transaction.
Finally, those who allege that the Financial transaction Tax will lead to a massive flight of financial markets from Europe have either not read or understood the proposal of the Commission. Precisely in order to prevent tax evasion, the proposal contains measures to mitigate this risk: a low tax rate, a broad tax base and the “home country principle.” If financial actors want to avoid the Financial Transaction Tax , they must completely give up their European clients. This is rather unlikely to happen.
Those, who combat the FTT must be asked, which alternatives do exist? Many member states have reached the limit of what they can bear as austerity measures. Should this small tax on the financial sector be worse for growth and competitiveness than a further increase of income and corporate taxes or further cuts in public expenditures?
If the ordinary citizen must accept higher taxes on wages, food and fuels as well as restrictions on basic public services, can it not be expected, that the financial sector too contributes its part?
The Financial Transaction Tax opens the possibility to unlock a significant source of revenues and to rebalance the tax burden – and to make it bear by those who can afford it."
