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US, UK fight trading tax plan
Source: Agencies |
September 29, 2011, Thursday
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TAXING financial trades has been touted as a panacea for all kinds of global ills - a cash source to fight poverty and global warming. But the latest European attempt to introduce a worldwide standard 40 years after it was first conceived is facing stiff opposition from the United States and Britain.
Jose Manuel Barroso, president of the European Union's executive arm, yesterday threw his weight behind the tax his office estimates could raise 57 billion euros (US$77 billion) a year in Europe to help combat a debt crisis threatening the euro currency.
"In the last three years, member states have granted aid and provided guarantees of 4.6 trillion euros to the financial sector," Barroso said. "It is time for the financial sector to make a contribution back to society."
The tax would be a tiny percentage of the value of a trade in assets such as stocks and bonds. Although some countries already have a minimal duty on share trading, the new proposal would not only increase the scope and size of the tax but also siphon some revenue to Brussels.
The European Commission has formally backed the tax to take effect from January 2014.
As a result of the financial crisis in 2008 and the ensuing recession, debt levels across Europe, not just bailed-out countries of Greece, Ireland and Portugal, have risen sharply. Across the 27-nation EU, debt as a percentage of national income has spiked from below 60 percent in 2007 to 80 percent this year.
Though the tax could dent growth and employment, it has won a fair degree of support across the 17-country eurozone, including France and Germany, the EU's two biggest economies.
Britain, however, opposes it unless it is imposed on a global basis. Its opinion carries weight because London is the continent's biggest financial center.
The argument made by people such as George Osborne, Britain's finance chief, echoed last week by his counterpart in the US, Timothy Geithner, is that the tax will not work unless it is introduced globally, other-wise investors will move money quickly to where the tax does not apply.
Even if Britain and the US decide to opt out, it is possible the eurozone countries, or at least some of them, will go it alone.
Jose Manuel Barroso, president of the European Union's executive arm, yesterday threw his weight behind the tax his office estimates could raise 57 billion euros (US$77 billion) a year in Europe to help combat a debt crisis threatening the euro currency.
"In the last three years, member states have granted aid and provided guarantees of 4.6 trillion euros to the financial sector," Barroso said. "It is time for the financial sector to make a contribution back to society."
The tax would be a tiny percentage of the value of a trade in assets such as stocks and bonds. Although some countries already have a minimal duty on share trading, the new proposal would not only increase the scope and size of the tax but also siphon some revenue to Brussels.
The European Commission has formally backed the tax to take effect from January 2014.
As a result of the financial crisis in 2008 and the ensuing recession, debt levels across Europe, not just bailed-out countries of Greece, Ireland and Portugal, have risen sharply. Across the 27-nation EU, debt as a percentage of national income has spiked from below 60 percent in 2007 to 80 percent this year.
Though the tax could dent growth and employment, it has won a fair degree of support across the 17-country eurozone, including France and Germany, the EU's two biggest economies.
Britain, however, opposes it unless it is imposed on a global basis. Its opinion carries weight because London is the continent's biggest financial center.
The argument made by people such as George Osborne, Britain's finance chief, echoed last week by his counterpart in the US, Timothy Geithner, is that the tax will not work unless it is introduced globally, other-wise investors will move money quickly to where the tax does not apply.
Even if Britain and the US decide to opt out, it is possible the eurozone countries, or at least some of them, will go it alone.
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