MEPs meeting in Strasbourg today have backed a proposal to introduce a tax on financial transactions across the European Union.
The plan was adopted with 487 votes in favour, 152 against and 46 abstentions. Pension funds will not be subject to the tax.
Supporters of the proposal say it will ensure the financial sector contributes to covering the costs of the debt crisis while going a long way towards stamping out banks’ risky behaviour and raising much needed funds.
Yesterday, EU economics commissioner Olli Rehn said the tax had the potential to raise €57 billion in revenue that could be used for targeted investment.
Irish MEP Nessa Childers welcomed the decision, saying the financial sector needed to contribute to recovery.
“The financial sector was a major cause of the crisis and yet has received over €4 trillion in public support in recent years, in Ireland and around Europe. . . . They must now make a fair contribution to our public finances.”
Opponents say the tax will strangle the financial sector. In a lively debate on the proposal in the parliament, British MEP Godfrey Bloom said was an example of “greedy bureaucrats wanting your money”.
The proposed tax rates involve a 0.01 per cent levy on shares and bonds and 0.01 per cent on derivatives. Through an “issuance principle,” financial institutions outside the taxed area would also pay the tax, provided the transactions made by them related to assets within the taxed area.
Parliament has been calling for this tax for almost two years with the latest Eurobarometer survey showing that 66 per cent of Europeans are in favour of it.
The author of the proposal, Greek Socialist Anni Podimata, said the tax should go ahead even if some member states object to it. “We cannot be held hostage by a few countries,” she said.
However, implementing the tax will not be easy. While parliament has sent a strong signal by backing the tax by a large majority, it only has consultation rights on taxation matters. A decision on the tax must be made unanimously in the European Council and several member states, including the UK and Sweden, are strongly opposed to it.
Minister for Finance Michael Noonan has said in the past he would only be in favour of the tax if it were rolled out on an EU-wide basis.
“If, as some countries have proposed, the tax was to be brought in under enhanced co-operation arrangements, we would fear we could lose business to London, since the UK is strongly opposed to this initiative,” Mr Noonan said in response to a question on the tax by Fianna Fáil leader Michael Martin last February.