Feb. 14 - The European Commission sets out how its financial transaction tax, aimed at making banks pay for taxpayer help they received in the financial crisis, would apply from next January. Hayley Platt reports.
The European Commission set out how its financial transaction tax (FTT), aimed at making banks pay for taxpayer help they received in the financial crisis, would apply from next January. Only 11 of the EU's 27 states support it But Europe's controversial new Financial Transaction Tax has finally been formally proposed in Brussels. The EU wants to raise 35 billion euros a year to help recoup some of the money paid out by taxpayers during the financial crisis. Its tax chief Algirdas Semeta says the sector is "under-taxed" by 18 billion euros. (SOUNDBITE) (English) EU COMMISSIONER OF TAXATION AND CUSTOMS UNION, AUDIT, ANTI-FRAUD ALGIRDAS SEMETA SAYING: "What we have proposed is an unquestionably fair, technically sound, and legally robust tax. A tax which will strengthen the single market and temper irresponsible financial trading." But the prospect of a levy on any share or bond trade has alarmed many. Critics say it may cut trading volumes and reduce pension pots. Semeta though says the tax is too small to have that much impact. (SOUNDBITE) (English) EU COMMISSIONER OF TAXATION AND CUSTOMS UNION, AUDIT, ANTI-FRAUD ALGIRDAS SEMETA SAYING: "We kept the low rates of 0.1 percent for shares and bonds and 0.01 percent for derivatives. We maintained the wide base covering all the financial institutions and all financial instruments. The real economy continues to be protected as we ring-fenced ordinary financial activities, citizens and businesses, as well as activities linked to raising capital." The EU also hopes the so-called Tobin tax will tackle speculative trades which unsettle markets. But it's not saying how it will stop banks passing on the cost of the tax to customers. More haggling is expected and changes are likely to take place before it takes effect.