The ETUC has long called for the introduction of an FTT in order to curb financial speculation, ensure that the financial sector contributes to covering the costs of the crisis and raise much needed revenue to goverments. The ETUC believes that the scope of the tax should be broad and cover all finanacial transactions, and does not share the idea to make exemptions for certain funds

On 23th May, the European Parliament adopted by a large majority the creation of a financial transactions tax (FTT) with the aim of appealing to the European Union states who oppose the measure. For nearly two years, the European Parliament has called for the creation of a tax on financial trasactions. The commission presented its legislative proposal in late 2011. According to the latest Eurobarometer, 66% of European citizens are in favour of this tax. With this decisive majority in support of the FTT, the European Parlament has shown that it has listened to the voice of  the European people. It´s now high time for the Member States to do the same.

A wider net

The adopted text adds to the Commission proposal the "issuance principle",  thereby financial institutions located outside the FTT zone would also be obliged to apply the FTT if the traded securities are originally issued within this zone. The “residence” principle proposed by the Commission is also kept, which would mean that the FTT is applied to shares issued outside of the FTT zone that have been bought or sold by at least one institution established within the zone.

Tackling tax evasion

The resolution also raises the stakes to make evading the FTT potentially far more expensive than paying it. Taking the UK stamp duty approach, the text links payment of the FTT to the acquisition of legal ownership rights. This means that if the buyer of a security did not pay the FTT, he or she would not be legally certain of owning that security. As FTT rates would be low, this risk is expected to far outweigh any potential financial gain from evasion.

Preferably EU-wide, but possibly less

If 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.

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.

Other important points

• The opinion does not request that the revenues from an FTT be transferred to the EU budget. It does indicate that if the revenues are placed into the EU budget then this would reduce national contributions to the budget; The rapporteur says that such contributions could be reduced by up to 50%.
• 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.
• The opinion maintains the original proposal to exempt transactions made on the primary market (i.e. purchasing of securities from the issuer when such securities are first placed on the market). This would ensure that investments of benefit to the real economy would not be taxed.

The opinion was approved with 487 votes in favour, 152 against and 46 abstentions.