Brussels, 11/01/2011 (Agence Europe) - In a speech on 10 January at the EP during the hearing of the economic and monetary affairs committee (ECON) on innovative financing, the European commissioner for taxation, Algirdas Šemeta, discussed the debate launched in the EU on this subject and the results from the meetings that he had in Washington on a number of subjects, including the possibility of introducing an international financial transactions tax (FTT). He thus outlined the analyses, provisional conclusions and positions of the Commission on the three sources of innovative financing put forward during the discussion on the report by Anni Podimata (S&D, Greece) regarding the issue of a tax on the financial sector, an energy tax and eurobonds.
Financial sector taxation. The commissioner outlined the three objectives pursued by the Commission in this field: - ensuring a fair contribution from the financial sector to balanced public finances; - complementing financial sector regulation in correcting undesirable behaviour for society in this area, without undermining EU competitiveness; - avoiding a patchwork of divergent national financial sector taxes which could create new obstacles to the single market.
After a preliminary analysis, the Commission sets out a two-pronged approach: a financial activities tax (FAT) at a European level and a financial transaction tax (FTT) at an international level. At an EU level, the commissioner explained that the FAT would be preferable to the FTT because this tax would ensure that the financial sector is taxed fairly and generates much-needed revenues. Furthermore, it could ensure greater stability of financial markets by taxing profits and salaries including bonuses, which could deter excessive risk-taking; the burden falling on the consumer would be much less than with the FTT; the risk for competitiveness would be lower with an EU FAT than with an EU FTT, as banking activities are harder to relocate than (electronic) transactions.
At an annual rate of 5%, the FAT could yield revenues of €25 billion for the EU27. With regard to the FTT, the commissioner indicated that talks were continuing in an effort to promote this kind of tax at a global level. He also indicated that the US authorities were prepared to discuss the matter during his visit to Washington last December. The commissioner recognised that if applied globally and at a rate of 0.1%, tax revenues are predicted to be around €60 billion. Estimates of even ten times this amount are cited by some studies if derivatives are included, although the commissioner considers these latter figures to be highly uncertain.
Šemeta explained that by summer 2011, the Commission services will have prepared an impact assessment and will have scrutinised the cumulative impact on financial institutions of the new regulation, bank levy and taxes. Work with other institutions (ECB, market regulators, etc) continues to evaluate data on the influence of financial sector taxes on capital costs and growth. The commissioner explained that all examples were being examined (the introduction of an FAT or an FTT at an EU level).
Carbon taxation. The commissioner referred to the complete overhaul of the carbon taxation directive (CTD), which is expected to create a framework for taxing CO2 emissions, at the same time as the Community's emissions trading system (ETS). This review is aimed at rationalising existing taxes on energy by linking them to the energy content, to avoid distortions between different types of energy sources.
In this connection, the Commission is now fine-tuning the impact assessment, with the intention of introducing a draft proposal for a revised directive very soon. Finally, according to Šemeta, this review provides an opportunity for encouraging innovation by promoting “green” technologies. The review of the ETD could offer member states a basis for restructuring their tax systems in a more growth-boosting, job-friendly way. Revenue from environmental taxation could also help avoid an increase in taxes on labour.
Another issue tackled involved the possibility of a border tax, in an effort to fight “carbon leakage”. In May 2010, the Commission presented a communication concluding that the ETS measures are sufficient in the present situation; it will, however, continue to monitor this phenomenon and examine the possibility of including imports in the ETS. With regard to Podimata's report and the reference to the idea of introducing a “carbon-added tax”, the commissioner considers that it would not succeed in changing the habits required in the chain of production and consumption.
Eurobonds. The commissioner was careful to distinguish between eurobonds for major European infrastructure projects referred to by President Barroso. In this context, eurobonds is “a common public debt management instrument based on mutual pooling of parts of sovereign debt”. The commissioner explained that “the proponents of this idea point to some interesting features, which however raise additional questions” but that “at present, the time does not seem ripe for discussion”. (F.G./transl.fl)