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G20 target for transaction tax and G-Sifis

Thursday 1 September 2011 - by Will Henley & Andrew Hickley


The European Commission, with key allies France and Germany, will push to get a global agreement on a transaction tax at the G20 summit in Cannes, according to José Manuel Barroso.

In a video address on Wednesday, the commission president said he would take the proposal to Australia and Singapore, where he is visiting next week, to try to win support for the measure.

The Portuguese's comments mark the first significant sign that European leaders intend to push hard for worldwide consensus on the controversial levy, known also as the Tobin tax.

The FTT proposal will sit alongside other financial reform ideas designed to radically shake-up the world's financial system, such as designating and slapping a surcharge on global systemically important financial institutions.

The Basel Committee for Banking Supervision, releasing 36 responses to its G-Sifi consultation yesterday, confirmed to Global Financial Strategy today that it would also finalise its proposals in time for the G20 summit.


In his address, Barroso said that the revenue generated by a tax on financial instruments would help boost the EU's central coffers. Pointedly he did not mention any other target for the revenue, such as using it to insure the EU's banks or pay for future bailouts.

Neither did he say it should be used to help pay for climate change or international development, as some campaigns groups have argued.

He said: "Ahead of the Cannes summit, we will come forward with a proposal for a European financial transaction tax, and we are committed to explore this further also at G20 level.

"I will be discussing this and other key issues with our G20 partners, such as Australia, where I will travel next week. This visit will also take me to Singapore and New Zealand, two other important partners in the region."

"The proceeds from this financial transaction tax would help to fund the EU's new multiannual financial framework, which is geared towards investing for growth and jobs across our Union. We will make detailed proposals on this over the course of the autumn."


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READERS' COMMENTS
2011-09-19 09:50:00 | kinya inugai
Dear respected leaders of EU countries!

I, as citizons of japan, agree heartily with the proposal "innovative financing at global level" by EU.
How it is most likely, to my idea, that the sheme should be desighn to be levyed to CLS settelement amount at every central bank currency accounts to which right every currency sovereignity belong.

As the reasons for that, I mind the following;

1.CLS Bank settlement value and ratio to total financial transaction is allready significantly high, so that per se could objection to tax. CLS settles 58% of the global FX trading activity (1,444bn / 2,491bn USD)according to official data. *

2. At that time, I mind to be concidered that CLS Bank participants are only a minority of 13,441 included 520 menbaer banks ,12,921 third parties, such as non bank, investiment funds, in addition to 63 settelement banks. And so taxing disaggregation prosses information is complete abailable ther in, as just reverse prosess of aggregation.

3.CLS Bank is (this would be the most important point) a system, in the name of reducing settlement risk, in fact truly risky dangerous all financial transactions to remain laissez-faile. It should be contained, indeed, real dangerous source and mechanism of largest global financial crisis in near future. It must be prevented in full force.

I am very obligated to thank you, respected leaders of EU contries, would be appreciated with reference to my idea.

* Under CLS Bank settlement value on the BoJ account by day is about 35 trillion yen, in 240 business year day,
assumed business year day is 240, and taxing rate 0.0005=0.05%, then year revenu by us should be culcurated 4.3trillion yen. It means for japanese budget means good not few contribution, even though it might be as bubble crisis preventation jet too weak.
2011-09-02 20:33:25 | Anonymous
Wow I sure hope the European Union does this, and puts business killing effect on the capitalist system in Europe, driving capital to the US so we can invest it. Awesome!
2011-09-02 15:29:56 | Carol Slatter
I can't even begin to imagine the tens-of-thousands of jobs that will be lost in the financial sector throughout the EU. Has anyone considered the impact of that on lost wages and taxes paid, and the devastation of families?
2011-09-02 15:23:12 | David Martin
A transactions tax must NOT be designed to catch individual investors in its net. If so, it will have a terrible impact on personal savings and investment. Why should we as individuals pay more and more and more for the mistakes of government agencies!!
2011-09-02 12:40:05 | Reason
Make markets less efficient? This is like strapping on ankle weights to sprinters. And it encourages inefficient and wasteful government spending. A giant step in the wrong direction.
2011-09-01 14:11:39 | Anonymous
banker
2011-09-01 13:51:47 | rhone
Brilliant. Raid the people's savings and investments.