Greek MEP leads campaign for a financial transaction tax

Nick Malkoutzis

BRUSSELS — Given Greece’s economic woes, one would perhaps not associate the country with groundbreaking initiatives on taxation, but a Greek member of the European Parliament, Anni Podimata, is at the forefront of a growing campaign to introduce a financial transaction tax (FTT) in Europe.

“I’m really delighted that the European Commission, which was opposed to the idea of a financial transaction tax, finally — under the pressure of the European Parliament and some major European capitals — changed its mind and proceeded to a legislative proposal,” she told journalists in Brussels this week.

Jurgen Klute, a member of the German leftist party Die Linke, also sits on the Parliament’s economic affairs committee and has backed Podimata’s proposal. He is not convinced by the banks’ argument.

“The banks sometimes say that the real economy should carry the cost but the tax is not so much if you compare it with the fees that the banks charge if you’re buying shares, which are 10 or 20 times higher,” he told Kathimerini English Edition.

Some MEPs argue that the FTT would be particularly damaging for pension funds, which engage in a lot of short-term derivatives trading, but Klute counters that the European Commission has been advocating a change in their investment practises anyway.

“There is an argument that it could reduce high-frequency trades but the commission’s position is that the pension funds should stop investments in derivatives and high-frequency trades and that they should invest in long-term instruments,” he said.

The German MEP adds that the FTT would have the added benefit of giving EU officials a much more accurate idea of the scope of various financial instruments since it would mean all the trades would have to be recorded properly.

Nevertheless, some countries remain firmly opposed to the FTT. The United Kingdom, because of the significant role the City of London plays in its economy, has publicly opposed the idea. The tax would have to be approved by the leaders of all the EU member states in a European Council meeting and there are others who could scupper a potential deal, according to Karel Lannoo, the CEO of the Center for European Policy Studies.

“I don’t think there’s a question that the financial transaction tax will go through because it requires unanimity. We know the UK is against it, so are Luxembourg and Ireland, and probably the Czech Republic and Slovakia,” he said. “We are going through a massive wave of re-regulation of the financial sector and to some extent it may be an overreaction.Klute suggested that it might be easier to get the tax approved only in the eurozone to begin with. Podimata is adamant that the EU should display flexibility to ensure that efforts to introduce the tax are not scuppered by objections from a small minority of countries.

“Our preference is clearly in favor of an EU-wide tax in order to renew the effort for the introduction of the tax at the global level,” she said. “At the same time, we will take into consideration the current circumstances and the realities on the ground, which means this preference should not become a point of weakness which can be used by some member states to block the whole process.”

The Greek MEP showed this week that she is in no mood to back down. She suggested some amendments to the Commission’s FTT proposal, which would see the tax imposed on financial institutions outside the EU if they trade securities originally issued within the Union. She also proposed measures to counter tax evasion, which would mean that if the buyer of the security did not pay the FTT, he or she would not be legally certain of owning it.

The economic affairs committee is due to vote on the FTT in April and the European Parliament’s plenary is expected to approve the tax in May. Then, it will be a question of whether the member states and their leaders are willing to adopt the proposal. For Podimata, there is still some distance to travel before her name can be associated with the introduction of the first tax of its kind in Europe.