EPP Group makes Financial Transaction Tax 'Fit for Real Life'

EPP Group pushes through higher tax rate for OTC transactions and lower tax rate for pension funds

"The changes we adopted today make the Financial Transaction Tax draft fit for real life. The transaction tax must not merely be a cash cow for national finance ministers, but must have a regulatory effect," says Othmar Karas MEP, Vice-President of the European Parliament. Parliament's Economic and Monetary Affairs Committee voted today on the planned financial transaction tax (FTT). Karas is the EPP Group's negotiator on the tax, to be introduced in eleven Member States only. The changes to the FTT were adopted by 30 to 10 votes.

Karas' proposal to apply a higher tax rate for so called OTC (over the counter) transactions was adopted. OTC transactions are transactions which take place outside regulated markets. Furthermore, MEPs call for consistent maximum tax rates throughout all participating Member States to avoid imbalances. "We don’t want any uncoordinated national add-on tax rates, as certain governments announced already," said the Vice-President of the EU Parliament.

MEPs also voted in favour of Karas' call to review national bank taxes "in the light of progress in EU banking regulation". "The more comprehensive and far-reaching European financial market regulation gets, the bigger the need to remove certain national rules. Here we need more coherence," Karas stressed. That is why Parliament wants to exempt certain transactions within groups of banks from the FTT. The new 'CRD4' banking regulation requires certain transactions within banks to fulfil liquidity requirements. Furthermore, the EPP Group's call to apply only half of the tax rate to pension fund transactions was adopted.

Parliament's Economic and Monetary Affairs Committee wants the income from the FTT to flow into the EU budget, to finance necessary investments. Also, new efforts should be made to introduce the tax beyond the eleven participating countries. "The FTT takes full effect only if it is introduced in the entire EU and ultimately worldwide," Karas pointed out. Parliament wants the EU to speak up for this in its cooperation with industry and emerging countries, the G-8 and the G-20 countries.