To win the climate battle, we know the solutions. We need to insulate all buildings, massively develop public transport and renewable energies, and transform our agriculture.
But all these projects, however useful and profitable they may be in the long term, face the same obstacle: who is going to pay for them? With adequate funding, a real European Climate Plan could create at least 5 million jobs. And by taking the money from where it is most abundant, we can also give oxygen to our health systems which are on the verge of asphyxiation.
This is why it is urgent to tax speculation. Or, as the experts say, to introduce a “Financial Transaction Tax” (FTT).
A matter of tax justice!
When you buy a phone or a computer, you pay at least 15.5% VAT. And even for basic food, even the most vulnerable among us have to pay 5.5% VAT. Everyone has to pay 5.5% VAT to contribute to the financing, among others, of education and public health. But for those who buy shares on the financial markets, currently the tax is 0.0%. What is the reason for this 0.0% rate? Are stocks and bonds even more essential to life than food?
Let’s make our voices heard !
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Already in 2011, the European Commission declared ‘EU Member States have committed € 4.6 trillion to bail out the financial sector during the crisis. In addition, the financial sector has benefited from low taxes in recent years. The financial sector enjoys a tax advantage of approximately €18 billion per year because of VAT exemption on financial services. A new tax on the financial sector would ensure that financial institutions contribute to the cost of economic recovery and discourage risky and unproductive trading.’
Today, the economy is suffering but financial markets are thriving.
Could such a financial transaction tax really increase revenues in the current crisis? Yes, in 2020 the European economy is at a standstill. But the volumes traded in March-April 2020 were 45% higher than in 2010 (the reference year for the European Commission’s figures). In times of crisis, volatility is high, but so are the volumes traded.
Volumes traded on the financial markets
A tax with a triple effect
The current crisis is changing things quickly. Today, almost every government in Europe should understand the value of joining the countries that want to tax speculation.
Together they can mobilise more than €50bn a year. With a threefold objective:
(1) 15 billion to reimburse the European recovery plan without taxing the average citizen.
(2) 35 billion to create hundreds of thousands of jobs through a real Green Deal.
(3) Releasing new funds for public health: over 30 years, France must repay €67 billion (and Germany nearly €100 billion) for the recovery plan. If these sums are reimbursed by the tax on speculation, France will be able to keep the 67 billion (Germany 100 billion), and invest it in public health or pensions.
In short: it is urgent to invest in climate, public health and jobs!
The first solution: a tax on speculation!
What are they waiting for? Everything is ready
After years of mobilisation, a proposal for a directive was published in September 2011. With a very reasonable rate (between 0.01% and 0.1%), the European Commission claimed that €81 billion could be raised per year in 2020!
The departure of the UK from the EU could impact the base up to 30%, but, as stated in the report voted on 13 November by the European Parliament on the financing of the Green Deal, “even after Brexit and in times of economic crisis, a Financial Transaction Tax (FTT) could bring in up to 57 billion euros per year”. In the report, the Parliament “reiterates its call on all Member States to adhere to the framework for enhanced cooperation on the FTT”.
Some pioneering countries can move forward without delay
Europe is too often paralysed by the unanimity rule. But enhanced cooperation allows a few pioneering countries to move forward on a proposal without waiting for an agreement among 27. If a country refuses to participate, it’s their problem, but none can block. And the door remains open to any country that wishes to join this cooperation at a later date. A new proposal for a directive has been on the table since 2013, to create an FTT in enhanced cooperation.
Today, E. Macron refuses a real tax on speculation.
Unfortunately, currently, the French government is blocking negotiations on a real tax on financial transactions. Indeed, the press has revealed a confidential letter addressed to the European Finance Ministers. In it, the Austrian Finance Minister denounced the French proposal which “exonerates 99% of transactions”. It is indeed the very small FTT that already applies in France that Paris is trying to extend across the rest of Europe. In his letter, the Austrian Minister proposes resuming negotiations on the basis of the 2011 proposal. This would tax equities and bonds at 0.1% and derivatives and high frequency trading at 0.01%.
The European Commission has stated that this tax can be introduced in less than 2 years.
Germany, Denmark, Poland, Portugal, Italy… very different countries seem ready to accept the Speculation Tax.
All European countries that want to join the group that supports the FTT will have a solution to repay their share of the common debt raised for the Recovery plan, and especially to finance the Green Deal, climate, health and employment.
Mobilisation has already moved the lines. To win, we have to continue!
Mobilised citizens, together with the European Parliament, have started to move the lines: in the agreement reached on 10 November on the budget for the next 7 years, the European Commission made a new commitment. If there is an agreement between a few pioneering countries on an enhanced cooperation by the end of 2022, the Commission will propose to make it a new European resource.
If there is no agreement by 2022, the Commission will propose for 2024 a new negotiating basis for the 27 EU Member states, for “possible” adoption in 2026. But 2026 may well be too late. Too late to avoid climate and social disaster.
Faced with 27 governments deciding unanimously, the European Parliament could not get more. But there is a much better chance of getting an ambitious decision from a group of pioneering countries in enhanced cooperation. There is not a minute to lose.
WHY DO WE HAVE A REAL CHANCE OF WINNING?
Governments are starting to move.
Within European governments, in recent months, the lines have begun to move. But we will have to make our voices heard to finally get a decision!
German development minister Gerd Müller (CSU) said he supported a financial transaction tax (FTT) that could ‘raise 60 billion euros a year’ (Zeit, 19 May 2020). This is ten times more than the plastics tax or and 46 times more than the digital tax on which EU Member States have already agreed.
Angela Merkel said the FTT must be part of the solutions to finance the recovery. And the FTT is identified as one of the priorities of the German EU presidency in the programme published on 1 July.
German Finance Minister Olaf Scholz said in April that he saw an agreement in the “near future”, and asked the Commission to open the FTT to more countries than the ten that have been negotiating it so far under the enhanced cooperation. On 21 September, he insisted that “Having a common European debt that will have to be repaid adds some pressure”, that he is optimistic that “unlike in the past, we will have progress that we have been hoping for for many years”, and that one of the “most promising ideas” is the FTT.
Some countries that rejected the FTT are now supporting it.
The Polish Prime Minister wrote an op-ed in the Financial Times supporting 3 new EU own resources, including the FTT.
The Financial Transaction Tax (FTT) has been held back for years by Belgium. It is therefore a major political fact that the new Belgian government supports the introduction of the FTT.
A very popular tax according to opinion polls
The speculation tax is a very popular proposal in Europe: 66% of European citizens support it. 75% in France and 82% in Germany, according to the Eurobarometer.
Lines are really moving! But to win, we need to be stronger than the banking lobbyists. Let’s all take action!
“Even after Brexit and in an economic crisis, a Tax on Financial Transactions could raise 57 billion € / year”