National and European competencies. EU opportunities for taking action with regard to different aspects of the new rules governing the financial world are not all the same (see his column yesterday). In particular, the European Parliament does not have specific powers on the so-called Tobin tax on financial transactions or on the tax on bonuses paid by banks to their traders and executives. The Parliament is, however, a co-legislator on an equal footing with the Council with regard to the supervision of financial activities.
Taxation is an issue that falls within the national remit: it will not be for a while until this issue is decided in Brussels or in Strasbourg. European rules undoubtedly impose binding restrictions on budget deficits and other obligations exist as well: the goal pursued is to strengthen economic coordination, particularly within the Euro-zone. Member states decide on what tax instruments should be applied. The political groups at the parliament are free to express themselves and indicate what they believe the orientations and preferences should be and they do speak up on this question. Their support for a specific tax on bonuses, as decided by the United Kingdom and France, was very broad. The only obligation that exists at a European level, however, consists in implementing sensible wage policies in each member state. This is a concept and not a regulation.
Bonuses system. The orientations being advocated are not all the same. In Germany, the general discourse is about putting a certain cap on the amount of bonuses paid. In Belgium, a general framework for healthy management exists in the financial sector and the government prepared (when the Prime Minister was Mr Van Rompuy) general draft legislation limiting severance pay and bonuses to 12 and 18 months of a standard salary. This issue will be tackled by the national Parliament in January. Each member state decides on the details of what action it takes. The specific tax on bonuses introduced in two member states is valid for a year. It is thought that it will be extended in France but it will be necessary to wait until the next elections in the United Kingdom to see whether a possible victory by the Conservatives would mean getting rid of the tax. According to one poll, 79% of Britons support this tax. The banking community has not as yet made any tumultuous declaration on the matter but has pointed out that this tax would give an advantage to other financial centres such as New York or Hong Kong, to the detriment of London and Paris. It also said that London is the only centre that can really compete with New York and it is in Europe's interest that it remains prosperous. The debate goes on at a global level.
Tobin Tax. The tax on financial transactions (Tobin tax) is being negotiated at a world level. The G20 requested that the IMF examine its feasibility and modalities and a report on the question is expected in April. The USA has confirmed its misgivings on the issue but 12 countries expressed support (Germany, the United Kingdom and Spain were among these countries). The European Council has been encouraging the IMF to include this tax in the range of possibilities for taking action (15 in the Conclusions). The Greens at the European Parliament affirmed that the EU summit had given its support to the tax and is calling for its swift introduction into the EU. Other monetary zones could follow. The banking community has reaffirmed that if this tax is not introduced worldwide it would encourage the transfer of financial transactions outside Europe and questions the appropriateness of a tax on a specific activity and posed the question of where the revenue raised would go: what ways could be used to ensure that the beneficiaries are effectively the fight against poverty and climate change?
Supervision. The third action instrument's legal and political situation is an altogether different question: supervision of the financial sector. The European Council would like negotiations with Parliament on the framework defined by the Ecofin Council to begin as soon as possible, “in view of rapid adoption so that the new system can become operational in 2010”. Parliamentarians do not disagree with the urgency of the question and intend to play a full role. The initial positions taken would suggest that parliamentarians are critical of the fact that the Council's draft does not grant sufficient binding powers to the future European supervisory authorities. In their opinion, the Council is not going as far as the Commission's proposal. One of the rapporteurs, Sylvie Goulard, is demanding that the recommendations and warnings from new European bodies should have a real impact on those to whom it is aimed and that there is an opportunity for publishing this information even if it is not extensively used. These initial comments represent the premise on which the parliament/Council negotiations will take place. No political force is able to imagine that all of theese positions will be retained in full. The objective will be an acceptable compromise to all sides.
What is important, is that this democratic negotiation exists and that the debate will be public.
(F.R.)