Brussels, 06/02/2012 (Agence Europe) - The pros of a financial transaction tax (FTT) in the EU would outweigh the cons by stabilising the market. Critics of the idea often make biased arguments to claim it is unworkable, but its successful introduction by France (the details were announced today) could set an encouraging precedent for the EU to introduce it across the board. This was the argument made at a press conference on Monday 6 February by the vice-president of the European Parliament, who is the EP rapporteur on the FTT, Anni Podimata (S&D, Greece), and economist Stephany Griffith-Jones, co-author with Avinash Persaud of research into the potential impact such a tax.
The European Commission's proposals for the introduction of an EU-wide FTT go in the right direction, said Anni Podimata. Uniform application of the tax would generate a fairer contribution of banks towards the cost of bailing out the financial system and would reduce internal market segmentation, encouraging investment in the real economy and hence growth and jobs. Another benefit is that it would discourage damaging high-frequency deals that suck money out of productive investment, generating risks and instability in the financial sector.
These arguments were taken up by Griffith-Jones who said that as member states were in the process of cleaning up their finances and reducing debt, the FTT could provide more than €50 billion which could compensate for falls in other sources of tax income or be used to cut deficits or invest in the green economy. The arguments against the tax - problems with application and the danger of companies avoiding it by moving to places in the world where an FTT is not levied, are false arguments, she says, as shown by the success of similar taxes (stamp duty, for example, in the United Kingdom). The objection that an FTT would impact negatively on growth is contradicted by the way it would stabilise the market and thereby prevent countries from having to bail out the system due to excess risk-taking. (FG/transl.fl)