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Tuesday, July 26, 2016
- Non-governmental organisations across Europe welcomed the move by 11 European Union countries Tuesday to move forward with the introduction of a financial transaction tax (FTT), but they urged national governments to ensure that a part of the revenues would be allocated to development.
Calling the tax a ‘golden anniversary’ present, because it came on the 50th anniversary of French-German friendship, a coalition of more than 70 NGOs appealed to French President Francois Hollande and German Chancellor Angela Merkel to spread a “public message of solidarity outside their borders” to guarantee that the FTT would be used particularly in the fight against poverty and HIV-AIDS, and to combat climate change.
“We are happy to see that the process is moving ahead but we’re very worried that the issue of allocating part of the money to development is not going to be taken up,” said Friederike Röder, a spokesperson for anti-poverty group ONE, which was co-founded by rock musician Bono.
“What can happen is that the countries will be so pleased to see additional revenues coming in that they might use the funds for their general national budgets and not be willing to earmark any for development,” she told IPS.
So far, Hollande is the only head of state who has said the FTT will go partly for development. France and Germany spearheaded adoption of this “major milestone” for EU tax guidelines, as the European Union’s taxation commissioner Algirdas Semeta put it on Tuesday. The decision came after a meeting of the EU’s 27 finance ministers in Brussels, but France had long been pressing for the move.
Former French president Nicolas Sarkozy vowed a year ago to implement the FTT without waiting for his European or G20 partners to come on board. “If France waits for others to tax finance, then finance will never be taxed,” Sarkozy said at the time.
The country’s parliament approved the tax and it was introduced last February during the waning days of Sarkozy’s presidency, but without the development aspect. Under Sarkozy’s socialist successor Hollande, who won the presidency last May, the law was amended to allocate an unspecified percentage of the tax revenue to development aid, compared with the 50 percent that French NGOs had requested.
During his campaign, Hollande had supported the so-called Robin Hood tax, amid vows to tax the rich and to alleviate poverty. His government has now pledged that this year 60 million euros of the funds from the FTT will be assigned to development aid, a sum that may account for only about 4 percent of the revenues, according to NGOs. But once the tax is fully in place, the government is expected to allocate 10 percent of the revenues for development.
“This would happen as from 2015, and it’s still way lower than what we expected,” Röder told IPS. “But what we have to acknowledge is that the law now stipulates that a part of the revenue will go to development, which is clearly progress.”
For Germany, Merkel had said that the tax would be the “right signal to show that we have understood that financial markets have to contribute their share to the recovery of economies,” but she wanted all members of the 27-nation European Union to agree on the measure before its imposition.
However, some EU members such as the United Kingdom, which already has a stamp duty, and Sweden have remained opposed to the idea, and it was only through the EU’s “enhanced cooperation procedure” that the FTT was given the green light for 11 instead of all 27 member states. Under this procedure, a minimum of nine EU member countries are allowed to establish integration or cooperation if they wish, without the others being involved.
The 11 nations backing the tax are Austria, Belgium, Estonia, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain. A 12th country is expected to join the group, according to sources in Brussels.
The measure will go now go before the European Parliament as a formality, to approve the European Commission’s proposal that transactions in shares and bonds be taxed at 0.1 percent, and trades in derivatives at 0.01 percent.
Overall, by implementing a levy of this percentage on financial transactions, France could gain up to 12 billion euros a year, according to the International Monetary Fund. At the European level, about 50 billion euros could be raised annually, the IMF says.
Some EU governments may consider using FTT revenues to support the banking industry, but several NGOs said that banks have continued to make profits despite being the main cause of the euro zone’s ongoing economic crisis. Governments in Spain, Greece and several other countries have had to prop up banks that were floundering after bad investments.
“The European FTT is a major step forward, but the main aim of this tax should be the fight against hunger, poverty, pandemics and climate change,” said Alexandre Naulot of Oxfam France. “A joint announcement by François Hollande and Angela Merkel would complete a constructive European approach in these times of crisis and budget cuts.”
Meanwhile, Khalil Elouardighi, chief campaigner for Coalition PLUS, a group of organisations that work to combat HIV/AIDS, told IPS: “If European leaders see the tax only as a way to plug their immediate budget problems as opposed to a once-in-a-century opportunity to finally finance those global challenges that are a huge threat to everybody, that would be a complete mistake.”
The group says that the financial transaction tax in France alone could help to treat an additional 400,000 people living with HIV/AIDS in the developing world, and there would still be “money left over” for many other problems. (END)