Commission Response on Financial Transaction tax is ‘an insult to the European Parliament’

PES demands a more considered and engaged response

The Party of European Socialists (PES) has strongly criticized the recent European Commission working document on ‘innovative financing options’, in particular the section on the Financial Transaction Tax (FTT). “The European Commission has ignored the near unanimous call for a considered response from the European Parliament and is attempting to sweep the issue of a Financial Transaction Tax under the carpet. This is an insult’, said Udo Bullmann MEP, Socialists and Democrats Group (S & D) Coordinator on Economic and Monetary Affairs.

On 10 March the European Parliament overwhelming called on the Commission to develop a European position on a financial transaction tax. The aim was expressly to ‘discourage excessive risk-taking’ by financial institutions and also to address the issue of damages caused by the crisis. Parliament asked the Commission to develop the position so that it could be presented to the G20 meeting in Toronto in June.

However the references to the FTT in the EU Executive’s paper are almost universally negative. They also contradict EU Commissioner for Taxation Algirdas Semeta’s line in September that a “very thorough and detailed impact assessment has to be made [on the idea of a FTT], and the Commission services will be ready to do this”. This commitment is not reflected in the Commission work programme for 2010. “We fear that this very insufficient and biased Staff Working Document will constitute the Commission’s only initiative on the issue”, said a PES representative.

PES President Poul Nyrup Rasmussen said that; “The resolution from the Parliament passed almost unanimously. For the Commission to attempt to dismiss such a democratically solid call for engagement on the issue of a financial transaction tax is an insult to the 536 MEPs who had requested a serious debate”.

Analysts also criticized the attempts by the Commission to present the debate as if it was a question of ‘either/or’ between an FTT and a new Bank Levy which would act as an insurance fund. The PES was joined by other experts who strongly endorse a mix of both mechanisms.

PES Financial and Economic Network Chair, and Austrian State Secretary for Finance, Andreas Schieder, stated that; “The Commission would like to present a false choice – either take a bank levy or an FTT. This is like saying that if you have a cold you can either wrap up warm or take some medicine, but not both. Why not? The financial services sector has caught the heaviest cold imaginable, and needs all the protection it can get”.

The PES will continue to highlight this issue in the lead up to its European Action Day on 24 April and on to the Toronto G20 in June.