08 MAR 2011

Britain's banks have been threatened with a damaging Tobin tax on financial transactions after the European Parliament voted through a report advocating the move.

By Philip Aldrick | The Telegraph

Under the proposal, the tax would be levied on each financial transaction by banks based in the European Union at a rate of up to 0.05pc – raising as much as €200bn annually. Support for the tax has been gathering momentum in Brussels in recent months after initially being rejected as unworkable by the International Monetary Fund unless it secured global agreement.

Michel Barnier, EU internal markets commissioner, last month became the most prominent figure to endorse a Tobin tax, telling a German newspaper: “I personally consider this to be the right idea.” However, he added that it would have to be implemented worldwide. The European Commission also has a financial transaction tax under consideration.

MEPs were voting today on an own-initiative report by Greek Socialist Anni Podimata and backed by the Economic and Monetary Affairs Committee. It was approved by 529 to 127, with 18 abstentions. However, as it was not introduced by the European Commission, it is of no legislative consequence.

The vote will nevertheless maintain the pressure on Brussels to consider a Tobin tax when negotiations for the next budget begin later this year. Brussels insiders said that the Parliament is keen to change the way the EU is funded, drawing its funding directly rather than through member states.

The next seven-year budget is due to come into force in 2013 and discussions on both its scale and its funding structure will be negotiated in advance. “This is just the parliament trying to have their voice heard in the negotiations later this year,” the source said.

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See also:
Financial Transactions Tax is Kamikaze Economics - Nigel Farage (Ukipmeps.org)