Official: EU to move forward on transaction tax

The commissioner’s comments came one day after voters in France and Greece, two members of the 27-country EU, threw out officials linked to the austerity measures that have been undertaken on the continent. 

But Šemeta said Monday he did not believe those results would affect the push for the financial transaction tax, noting that François Hollande, the socialist president-elect of France, backs the tax.

“I do not see a difference or change in attitude in France and Greece in terms of their support for financial transaction tax,” Šemeta said. 

In the United States, Democratic lawmakers have pushed for a transaction tax, arguing it would rein in speculative trading that they say is all too common.

A proposal from Sen. Tom Harkin (D-Iowa) and Rep. Peter DeFazio (D-Ore.) would essentially install a tax of 0.03 percent on trades of stocks and bonds. Supporters of the plan have said the proposal could eventually raise more than $40 billion a year.  

Harkin said Monday that supporters of the transaction tax in Europe and the United States see the proposal as a logical step toward more equitable tax systems. 

“With these E.U. nations now moving forward, it is my hope that there will be a serious look at the U.S. alternative as we consider tax changes at the end of this year,” Harkin said in a statement.

But backers of the proposal also acknowledge they face long odds, given Republican opposition to tax increases. The White House has yet to embrace the idea, and the banking industry is dead-set against the plan. 

The Congressional Budget Office said late last year that a transaction tax could drag down America’s position as a financial power, though the scorekeeper added that the tax’s impact would be more limited if other jurisdictions implemented a similar levy.

As for the EU, Šemeta acknowledged that certain member countries, like the United Kingdom and Sweden, believe the current transaction tax proposal could push financial activity out of Europe.

Because the EU requires unanimous decisions on tax issues, that has led to discussion in the past over whether the 17 countries that use the euro should move forward on their own with a transaction tax. 

The EU has discussed installing a tax of 0.1 percent on trades of shares and bonds, and a recent EU committee resolution said the transaction tax should be crafted to catch more traders.

EU finance ministers are expected to discuss the tax again at a June meeting. 

In his interview, Šemeta acknowledged that EU decision-making on the transaction tax was complicated, and that he hoped a compromise could be reached.

But the tax commissioner also noted that financial services in the EU are generally exempt from a value-added tax, and that EU governments gave 4.6 trillion euros of support to the sector in recent years.  

“That actually allows us to consider that the financial sector has to make its fair contribution to the public finance,” Šemeta said. “On the other hand, I think it’s very important to show that we need to restore confidence of our citizens vis-à-vis the financial sector.”