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The idea to introduce a Financial Transaction Tax gains new impetus: as Euro Group Chairman Jean Claude Juncker disclosed at a fringe meeting of the Council of Finance Ministers, all Eurozone countries had agreed to accelerate the preparations for a Finance Transaction Tax at EU level. Particular interesting is Germany's role in the ongoing discussion: if until recently the German government had been against such a tax, it has at present completely changed its opinion and is now also in favour of introducing a tax on financial transactions.

The reason for the German chancellor Merkel to change her mind was the condition of the Bavarian People's party CSU only to agree to the Euro aid package if this would result in the introduction of a Financial Transaction Tax. The consequence was hectic negotiations behind the scenes. The result: the FDP distances itself from its categorical rejection of the tax, does, however, not express its explicit support. The CDU agreed with the CSU to support a Financial Transaction Tax.

As a first reaction, opponents of the tax made an attempt to cause confusion by just renaming the banking levy model, which until recently had been Germany's favourite model - calling it now Financial Activity Tax. To go even further, the term Financial Market Tax was introduced into the discussion.

Therefore, at this point a short definition of these three terms:

  • The term Financial Market Tax is currently used as an umbrella term, which contains both the Financial Activity Tax as well as the Financial Transaction Tax.
  • The Financial Activity Tax is a new term for the bank levy. A certain percentage of the balance sheet total of financial institutes should be levied to involve the financial sector in tackling the financial crisis. In following the so-called Swedish model by imposing a tax rate of 0.036 %, the Commission expects revenue of € 13 billion for the EU 27.
  • The Financial Transaction Tax is directed against short-term speculation involving the transaction of large amounts of money on the financial markets. Based on a tax rate of 0.05 %, the Austrian Institute of Economic Research calculated a potential revenue of about € 289 billion for the EU 27.

In the meantime, SPÖ and SPD for the first time want use the option - created by the Treaty of Lisbon - to hold a EU referendum in order to increase the pressure to introduce a Europe-wide Financial Transaction Tax. One million signatures from several EU countries have to be collected to oblige the European Commission in its capacity as legislator to deal with the Financial Transaction Tax.

Labour representatives such as the Chamber of Labour, the Austrian Trade Union Federation and the European Trade Union Confederation, as members of the campaign “Regulate Global Finance Now”, have for months backed the introduction of a Financial Transaction Tax.

Further information:

More information on the campaign “Regulate Global Finance Now”